Is it bad to consolidate your credit cards?
The key to financial power lies in your credit rating. If you plan to get a home loan, save money and get better credit starting now!
Yes. There's a reason they are called debt CONsolidation loans...Let's say you have 5 credit cards with credit limits of $5000 each. The total of all the balances on the 5 cards is, let's say, $10,000. You go out and get a loan for $10,000 to pay off the balances. They are going to charge you a fee to get that loan so already you are going to have to pay off more than the $10k you already owe. In addition - ARE YOU GOING TO CHANGE YOUR SPENDING BEHAVIOR ONCE THE CARDS ARE PAID OFF??!?! This is a VERY important consideration because if the answer is no, you are setting yourself up for failure. Sure, you may pay less in the short run, but the next purchase you make on credit just ruined the entire reason for getting the loan in the first place. Most people get these loans to stop short term bleeding of money but in the long run their spending habits do not change and they go out and rack up balances on their credit cards all over again - so they get deeper in the hole by owing the original CONsolidation loan AND more credit card debt. Do yourself a favor for you and your family - take a moment to think about the future - get out of the vicious cycle of credit card debt by stopping your use of them and living on less than you make. Cancel the cards, cut them up and make extra payments on them until you are no longer a slave to the credit card companies.
Is it bad to consolidate your credit cards?It will temporarily drop your credit score. Your debts will show on your credit report as 'purchased by another lender' which is a red flag for underwriters.
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