Shuffling credit cards to lower debt

It is possible to drastically cut the cost of credit card interest before getting new cards to consolidation loans.

One of the most common reasons for looking at the interest rate costs of credit cards is that they are looking to get control of their credit card debt.  The discipline of shuffling debt is a good start on the path of reducing credit card debt.

Consolidation loans can be a dangerous way of starting to reduce credit card debts.  This is because they increase a borrower’s capacity for debt as they clear credit cards of their current balances.  What this means is that if they continue to spend on their credit cards then they will see their overall debt increase.  Consolidation loans are often a good step in dealing with credit card debt, but usually at a later stage.

Consolidating, or shuffling, credit card debt can be a good move at an early stage of dealing with credit card debt.  This is when credit card debt is moved on to lower interest credit card balances.  There are a number of steps in doing this.

The first thing to do is to call each credit card issuer and ask for a lower interest rate.  If the credit card holder is regarded as a good borrower then it is likely that a lower interest rate will be granted, this is quite likely to be the case if there is a customer retention representative involved.
At the same time it is a good time to ask what the rate is for balance transfers and to see if this can also be improved.  If there is a good balance transfer rate then the borrower should ask for an increase in the credit limit.

After this has been done for each of the cards then it should be decided where the best interest rates are and to then start transferring debt to these cards.  The debts should be transferred from the highest interest rates to the lowest interest rates.

Shuffling credit cards can affect a card holder’s credit rating.  This is due to the fact that there is no credit outstanding on some of the cards and that some of the credit cards have all their available credit taken up.  The ratio of taken credit to available credit is an important measure.

At this point it is a good idea to start paying off debt from the most expensive cards and once a pattern of down payment has been established to look at lower cost cards or consolidation loans.

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