Low Interest Credit Card ConsolidationHow To Use Low Interest Credit Card Consolidation As A Method To Eliminate Credit Card DebtsThey can be a convenient tool for online shopping, for emergency situations, for reserving a hotel room, or for the many other uses for which they were created. But, when used irresponsibly, credit cards can increase your debt beyond reasonable levels and cause you to pay needless amounts of monthly interest. For many people who have allowed their credit card debts to get out of control, low interest credit card consolidation is seen as the best way out of debt. They are often confronted with numerous offers to consolidate their various debts into a low interest or no interest credit card. However, no mater how attractive that "low interest credit card offer" appears, you need to take a closer, more skeptical look. The Low Interest Credit Card OfferOften, the low interest credit card rates advertised in the enticing offers are only available to cardholders with exceptionally good credit ratings, not those struggling to free themselves from excessive debt and a poor credit history.Even so, the best low interest credit cards can offer a possible long-term debt free solution, especially for non home owners. You might be able to qualify, but you won't know until you submit an application, so it's always worth a try. Yet, even if your application is accepted, there are several things to keep in mind. Even the best low interest credit cards will rarely lower the principle amount outstanding. So, though your various debts are now consolidated onto one card, you still have the same amount of debt to repay as before. And, depending on the rate of interest agreed to, you may end up paying more over the long term. An ExampleWhile it can be a real benefit to have a new lower interest rate, it doesn't always mean that the total amount of your debt repayment is lowered. Let's consider an example:If you pay 8% on a debt of $12,000 for 5 years, it will cost you significantly more than if you pay 10% on $12,000 for just two years. The compounding effect of interest is to blame for the higher cost. For instance, in the first case, $12,000 @ 8% for 5 years, the total amount of interest paid is $2,599.00. Overall, the net interest rate is 21.658% when calculated as the percentage paid beyond the principle. When we consider the second case, $12,000 @ 10% for 2 years, the net interest rate is just 10.748% as you pay only $1,289.74 in interest. Note that the 8% versus 10% is the APR, that is, the annual percentage rate or the rate for a period of one year, and not the total percentage of interest. Naturally, the upside is that your monthly payments are just $243.32 when the rate is 8% over 5 years, while in the second case, when the rate is 10% over 2 years, your monthly payments are $553.74. Of course, many people would be inclined to choose the lower amount, finding the lower monthly payment easier to manage despite the added interest cost. But, to think of it another way, if you could manage the larger payments for 2 years, you could use the difference saved ($1,309.26) to purchase a big-screen HD television, or whatever else you want. By testing different scenarios, you might discover a middle ground that offers a manageable monthly payment with an acceptable total interest cost. Loan calculators can be searched for online that can help you to test different rates and terms, so you can choose the best low interest credit cards for your circumstance. Low interest credit card consolidation might offer a good debt free solution, provided you've done your homework and checked all the angles. Choosing The Best Low Interest Credit Cards TOP of Low Interest Credit Card Consolidation RETURN to Consolidate Credit Card Debts HOME to Get The Best Credit Cards
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