Credit card: Debt consolidation (personal finance)
Having a credit card debt is worrisome but having multiple credit card debt is suicidal. Many of us have at some point of time been in a situation where we must have contemplated to transfer such multiple debts into one single card in order to make the accounts more manageable.
Noble thoughts, I would say. But before you execute your noble thoughts and get into action mode give your debt consolidation a second thought. It is important to understand and decipher the inherent risks involved in debt consolidation. In all probability, it would require you to mortgage your home or some other immovable asset with the credit card company. Effectively it means that you are going to trade your secured debt for unsecured debt. Not a good proposition. Consider this: in case you fail to pay up the consolidated debt, you risk losing your house for the credit card pay default. Which otherwise (when no debt consolidation was undertaken) would have only resulted in a bad credit report. The risk of losing your house would not have existed. Another factor is that the new card company where you would be moving your debts might not have great interest rates to offer against the situation where you always would in a position to negotiate the rates with you present Credit Card Company.
