Many people talk about consolidating their payments, but what are they seeking to benefit from it? There are several things you should know before you consolidate your credit card bills.

First of all, there are several ways to consolidate your credit card payments. One way to consolidate your payments would be to transfer your balances from several different cards to one card. This would allow the convenience of only having one payment, but low introductory rates don’t last very long. You also may be putting yourself in a bad situation if you have to find another way to lower your monthly payment. Another way to consolidate your bills is to get some kind of loan such as a consolidation loan or home equity loan. These loans may carry high rates that will not be beneficial, or require collateral that you could lose if you default on the loan.

Another way to consolidate your payments is to follow a debt management plan. This type of plan is not a loan, but it does allow you to pay one payment each month. When you sign up to a debt management plan, your creditors are more willing to work with you to lower your finance charges because they want to ensure that you will be able to pay them back the debt you owe. Often times you are able to pay a lower payment each month while still making reasonable progress to pay off your credit card accounts.

Another thing you should know before seeking credit card consolidation is that there are companies who offer things that are better than true, but are in fact not a type of debt consolidation. Some who advertise to clear up your debt are offering bankruptcy or debt settlement. Bankruptcy is certainly a valid option for some people, but make sure that you have tried less extreme ways of fixing your debt problem as it can affect your finances for quite some time. Debt settlement companies often charge you high fees to provide a service that you can do on your own. They also are not usually up front about the other problems with settling your debt such as the additional taxes you will owe and the harm that it does to your credit score.

While consolidating and lowering your credit card payments is convenient, make sure you are also finding a way to lower your interest rates or it will take you much longer to get out of debt. If you have a lower interest rate on your debt, you will be able to apply more of your monthly payment towards paying off your debt. This is what a debt management plan does which is why it can be helpful for so many different people.

If you take the time to seek the help you need, you should be able to find a way to consolidate your payments and spend less of your money on interest. Make sure that whatever debt consolidation option you choose works for you.