Three Things You Need to Know About Credit Card Debt Consolidation

Credit card debt consolidation is on the minds of millions of American consumers -- and it's no wonder considering the fact that the average American household is paying $700 a year in finance charges. If you're one of the many who have decided to consolidate their credit card debt, there are some things you need to know.

Before you make any moves, consider these three credit card debt consolidation tips.

1. Your Home Equity Is Not An Option

If you've considered taking out a home equity loan for purposes of credit card debt consolidation, stop right there. You're about to make a BIG mistake.

Your home equity is an asset. Do not tap into this asset to consolidate your credit card debt. Why? The answer is simple... You might lose your home if you do.

Bad things happen to good people and if there's one thing this world has taught me, it's that you can't take anything for granted and that unforeseen circumstances can (and do) happen. If you have a crisis that results in you missing a few credit card payments, your credit gets dinged but you get back on your feet, start paying on time again and everything eventually goes back to normal.

Now let's say you've consolidated all of your credit card debt into a home equity loan. A crisis happens and you can't make a few of your monthly payments. You don't just get a ding on your credit report -- you can now lose your home because you used it to secure your consolidated credit card debt.

Do yourself a favor -- never trade unsecured credit for secured credit. If you do, you may regret it in the future.

2. Forget About the "Counseling" Services

If you are serious about credit card debt consolidation, you may have considered a credit counseling service. Unfortunately, the majority of these services don't deliver what they promise and they are a waste of time and money. Consumers are often surprised to discover that they can accomplish on their own what these consolidation services charge money for.

A credit card debt consolidation service isn't going to magically erase your credit card debt. They're going to try to lower your interest rates (which you can do on your own). Then they're going to create a "plan" that involves taking the monthly payment you give them and divvying it up between your credit cards.

Do you really want to pay a service to do this when you can do it just as effectively on your own?

3. Don't Judge a Card By It's Introductory Offer

Using a low-interest credit card for credit card debt consolidation is a great idea, however, a low-interest introductory offer that spikes up in six months isn't going to do you a lick of good if you can't pay the balance off before the intro period ends.

If your credit card debt isn't that high and you can pay off your balance in six months or less, then by all means, go for a credit card with a low intro rate. However, if you're quite a few thousand dollars in debt and you need time to payoff your balances, you should seek out a long-term low-interest credit card. Forgo the 0% for six month offers and look for a fixed rate of less than 10 percent.

While it's true that credit card debt can feel like the endless tunnel, credit card debt consolidation can be the means of finding the light at the end of it. If you're serious about credit card debt consolidation, use the Web to find a low-interest credit card that will enable you to roll all of your credit card debt into one low-interest account and then pay as much as you possibly can towards that card each and every month.