Debt Consolidation Didn’t Work For Me
By Drew Johnson on Friday, August 31st, 2007 :: 4:40 pmCategory: Drew's Corner
When my credit card debt got really bad, I had an epiphany. “I’ll transfer my debt from my high interest Visa card to my low interest Discover card,” I thought. “I’m a genius! I bet this will fix my debt problems!” It didn’t fix anything, it just made my problem look like it was fixed. This is the problem with all debt-consolidation plans: they only offer the illusion of positive action.
If you have a credit card (you wouldn’t be reading this if you didn’t) then you’ve gotten an offer for a balance transfer. Transferring credit card debt from one card to another is, in theory, a good option for lowering interest rates and saving money. Credit lenders offer you a low balance transfer interest rate, sometimes as little as zero percent, and you benefit from having all your debt in one place – away from the high-interest card that previously contained it.
On the surface, it’s a good plan. The ostensible benefits of any debt consolidation plan – convenience and lower interest – are certainly achieved with a balance transfer. But most balance transfer offers come with at least one catch: the low transfer rate is only temporary, or there is a transfer fee which negates the benefit of the low introductory interest rate.
This is the trouble with all debt consolidation plans: the long term benefit (the possible savings over the years of a lower interest rate) is negated by the short term trouble (an exorbitant fee). The fundamental problem with debt consolidation is that it’s just a band-aid. Any debt consolidation plan will only move your debt from one place to another - it will not actually reduce the amount you owe.
This is where the balance transfer failed me. Though I did enjoy having all my debt in one place, I was still stuck with a lot of high interest debt; it was just all in one place! I could still only afford the minimum payment on my credit cards every month, and even though my interest rate was lower, I wasn’t actually reducing the principal of my debt any more than I was before.
In the end, I had to take much more initiative to reduce my debt. Moving my debt to a more convenient location didn’t actually help anything, it just let me delude myself for a while into thinking I’d actually made some progress. If you are ready to make some actual progress on your problem credit card debt, call MyUSADebt today!
Author Bio: Drew Johnson is an expert in the various methods of debt reduction and has successfully reduced his own debt. Read additional articles by Drew on Debt Management, Credit Management and more.
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