Why is consolidating your credit card bills not recommended?

Question

Why is consolidating your credit card bills not recommended?

Answer 1

I don't think that it isn't a bad idea.  I have $7000 on 11 cards and I am taking out a personal loan to make it all into one payment.  Just make sure that you don't continue to use the cards after you consolidate them, it will just make you debt that much more.

Answer 2

If you can geta fixed note to do so it is the best who would say it isn't

Answer 3

I'm not sure who told you that. The whole idea is you want to consolidate by either transferrring balances to the card with the lowest interest rate or getting a personal loan with a low interest rate to pay all your card balances off.

Answer 4

Because "consolidating" really means taking out a new loan, for the entire amount that you owe all your creditors.

Suppose you owe $1,000 including interest to 3 different credit card companies. You take out a "consolidation loan" of $3,000 to pay them off. Now you only make one payment per month. The problem is, you paid interest to the credit card companies. And you still have to pay interest on that $3,000 loan. So you end up paying interest on interest. Not a good idea.

Also, the loan payment might be lower than the payments for your credit cards...but it lasts longer. So you actually end up paying more money than if you just paid the credit card companies directly.

If you are having trouble meeting your debts, call your creditors and negotiate with them. Many will stop charging you interest for a time, or even reduce your debt by up to 50%, as long as you follow through and pay them eventually. If you take out a consolidation loan, you will be paying 100% of the credit card charges, plus interest.

Answer 5

Personally, I recommend it.

But you must pay attention to one of the biggest mistakes people make.  Once your old cards are paid off, DO NOT use them again!  Too many people see those "now empty" cards and run up the balance again.  The next thing you know, you are in twice the amount of debt you started in.  Bankruptcy usually follows.  

This is what happened to countless numbers of people a few years ago.  Consolidation loans and home equity loans were easy to get, and people just couldn't control their spending.  That is why there was a HUGE jump in bankruptcies.

You are consolidating because you got yourself into a major debt problem. If you haven't learned your lesson, and don't control it, you will be in big trouble if you consolidate.

But if you can control it, you will save a lot of money and be out of debt much sooner.

Answer 6

It can be harmful if you run the cards up again. Also if you close the accounts your credit utilization will shoot up and lower your credit score.