Debt consolidation usually involves finding a bank or lender who will give you a loan to pay off all of your other loans at a lower interest rate. Often times the pay off time is much longer. For example, you may end up consolidating two five year car loans into a 15 year debt consolidation loan. The added time lowers your payments, but in the end you can end up paying much more.
Credit cards make money when people don't pay off their balance at the end of each month. Many times the interest rates they charge are well over 20%. It is easy to see how they can make so much money--even if there is a high number of people who are unable to pay because the interest rate is so high.
Since the interest rates are so high, the credit card companies need to do some type of special incentive to try to attract people to use their card. Sometimes they create sky miles programs. Sometimes they create benefit reward programs or other special perks. Many credit card companies create a special deal designed to lure customers to their card. The types of customers they want are the ones who carry a balance, so they create programs designed to attract those types of people. What people who carry a large balance are looking for is a lower interest rate.
Many credit card companies offer special introductory rates of 0% interest or other low rates. This is designed to attract consumers who have a large balance because the companies know they are the most lucrative in the long run.
You can use these offers to make a simple short term consolidation loan. Simply sign up for a new credit card with a lower interest rate than your existing debt and then transfer the balances from your other loans to the new credit card.
Most credit card companies are glad to help you do this because they know once the introductory period is over, they will charge you a higher rate and make up for anything you gained at the lower interest rate. If you are careful and payoff the credit card (or move the debt elsewhere) you can take advantage of the rate without ever having to pay the high interest. Credit card companies know that most people will just leave the money there and pay the high interest, so they make a lot of money by offering these types of programs.
This isn't a good long term strategy, but it can work effectively as a short term method of debt consolidation. Just be very careful to keep your options open because you don't want to get into a situation where you are trapped in a high interest rate with a credit card lender.
Without a solid plan for getting out of debt, this type of approach can be very detrimental because it can put you in a position where you are paying very high interest on a loan without the ability to transfer that loan to a lower interest rate. If you have trouble controlling your spending, you should probably avoid this type of set up because it will probably haunt you for years to come. It is easy to spend money and many people find it even more difficult to control their spending once they get a little relief--even if they know it is just a temporary low interest period.
The best way to get out of debt is to cut your spending and put every penny you can toward paying off the money you have borrowed. There are times when it makes sense to move money around to lower interest loans and there are times when it may make sense to move the debt to 0% interest credit cards, but your overall plan needs to be to pay off the principle as quickly as possible. If you get too focused on just bouncing money around from low introductory rate to low introductory rate, you are only going to be able to keep it up so long. In the mean time your debt will grow and it will be even more difficult to get out of debt down the road once you decide to get serious about paying off your credit cards and other debt.
Good financial decisions are not something that happens by accident. Most people are not unlucky financially--just unwise. You have to make a conscious effort to get out of debt. Take advantage of low interest rates in a sane responsible manner, but don't for get your real goal is to pay off your debt entirely.
Latest Non-Fiction Articles
Don't Let Good Grammar Spoil Good Writing
By: Philip Yaffe | 19/08/2008
Good grammar is fundamental to good writing, right? Wrong. However, years of experience working with people who use English as a second or third language have demonstrated that focusing too much on grammar can actually be detrimental to good writing. It's a question of priorities.
Modern Helicopters-the Eh-101 Merlin
By: K. Crockett | 16/08/2008
AgustaWestland is a joint venture formed by Agusta of Italy, makers of the A-109, and Westland of Great Britain, makers of the Lynx. The EH-101 is a direct competitor to the Sikorsky S-92 and was developed for both military and civil roles.
Animals
By: shivani suraiya | 15/08/2008
All about animals. About their origin, their lifestyles and their habitats including some interesting facts on different subjets. mostly based on mammals overing all extinct mammals around the world and which are not very well known.
The Three Speech Writing SECRETS You MUST Know - The Definitive Speech Writing How to Guide
By: Stuart Brown | 15/08/2008
In this article I am going to explore several techniques as to how you can improve your speech writing abilities, and also how to approach writing a speech for certain different circumstances. Whether it be for a wedding, where perhaps you are the best man, or for an important business meeting where you really need to impress. And tell you the three secret ingredients every speech needs.
Writing Your Thoughts – the Carrot and Stick Strategy
By: Nick Sanders | 14/08/2008
When you are writing, having a strategy in mind is rather useful – especially when you are wanting your reader to commit to something or someone. You will want to lead the reader in the direction you intend to finish upon and don’t want to cause confusion and misdirection in your writing. Here are a few tips on the carrot and stick strategy of writing that is good to use in a time of need.
Science: Guaranteed to Curb Creative Thinking!
By: Natasha | 13/08/2008
In today's sci- fi world dominated by facts and figures, the essence of life and belief in God's miracles have been thrust aside as illogical and futile, nonetheless God NEVER fails to surprise us....
How to Develop Your Book’s Structure
By: Melinda Copp | 12/08/2008
A man came to me last week because he needed help writing his book. He told me that he’s had this project on his to-do list for years, but he just couldn’t seem to get started. He’s literally been staring at the task—start writing my book—almost every day, and when he came to me, he still hadn’t done it.
How to Write a Bibliography
By: Stuart Brown | 11/08/2008
If you're like me, you probably put your heart and soul into creating a wonderful paper, essay or article. You know that you conducted the necessary research and that you wrote a sound paper. However, you are now at the end and you may be wondering, how can you write a bibliography? Well, I am here to tell you how.
Writing 
