Credit Card Debt Consolidation

More often than not, it refers to the process of regular debt consolidation - the debtor borrows money at a better interest rate to pay off money owed at high interest rates. In this case the debts being consolidated would be balances carried on credit cards, thus the name.

However, "credit card debt consolidation" can be also interpreted as taking high interest debts and consolidating them onto another credit card that has a better interest rate. This is often referred to as a balance transfer by credit card companies - but because you are putting all your bills into one monthly bill with a reduced interest rate; it is in fact a form of consolidation.

Most people who are seeking out debt consolidation can't qualify for a credit card with a low-enough interest rate to hold all of their high interest bills (because their credit usually isn't good to begin with).

Those than do qualify for a balance transfer should be sure to read the fine print to find out how long the low interest rate is applicable. It might be tempting to have an interest rate at 5.9% for a couple of months; but if the interest rate goes up significantly after that you may end up right back to where you started.

Under the right circumstances credit card debt consolidation is a lot like getting a regular debt consolidation loan; allowing you to take high interest debt and turn it into one, smaller monthly payment with a lower overall interest rate. If you're considering putting all of your debt onto one credit card - be sure to check out all the terms first.