Of course the title is an overstatement on both sides, credit cards are neither your salvation nor a destroyer, they're a tool and how you work with that tool is up to you.
They can be selected for the sake of convenience, for online shopping and some other uses for which they were designed, or they can become an option of increasing your debt to ridiculous levels and cause you to pay dreadful amounts of unneeded interest every month, many who let credit card debt get out of hand see debt consolidation as the way out of his or her debt problems, they're often presented with a great deal of offers to lower his or her credit card debt by consolidating all their debt onto one credit card.
But these offers, though they may at times tout "lower interest rates" had better be viewed with a sceptical eye, these lower interest rates are in the main only available to a select few with very good credit ratings, that does not apply to the typical person who is struggling to overcome a history of excessive debt and find a way out of his or her debt problem, notwithstanding they may offer a way to figure out the problems over the long run, you may in fact, be able to qualify, the only way to be sure is to apply, however even if you're accepted, there are a good number of key items to keep an eye on when considering this debt consolidation solution.
Very rarely will such credit card offers reduced the real total amount of principle outstanding, as a consequence you have precisely the same total amount of debt on the day you obtain the new card and over the long term you will actually sometimes pay more.
A reduced rate may indeed be a gain, notwithstanding lowering the rate doesn't always mean lowering the total amount, if you pay 8% on a debt of $10,000 for five years, you will pay more than paying 10% on $10,000 for two years, the cause of this is the compounding effect of interest, the total amount of interest paid in the first circumstance is $2165.60, the net interest rate overall is 21.656% when calculated as the percentage paid additionally to the principle, in the second circumstance, you pay only $1074.80 with a net interest rate of 10.748%.
Remember the 8% vs 10% are the APR in each outcome, the annual percentage rate, this is the interest rate for a calendar year period not the total percentage of interest, the upside to this is that in the case of 8% over five years, you pay only $202.76 per month, in the second circumstance you pay $461.45 per month, most may find the former re-payment easier to administer than the latter and you could be able to discover some middle ground.
Calculators available online will assist you to run by the different scenarios, in order to guide you to selecting the one that is best for your debt consolidation solution.
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