Financial Intelligence
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We’re bombarded on a daily basis by a UK media that frowns upon credit card debt, and that wags a finger in our faces at even the thought of using credit cards to spread the cost of goods or services we can’t quite afford.

It’s fair to say that there are cheaper ways of borrowing money, but few offer such an intoxicating mixture of flexibility, purchase protection and immediacy.

So if you have a collection of plastic in your wallet and you feel like giving yourself some personal pride points for slimming down your purse or wallet during the bleak, post recession austerity, maybe you should consider a private audit of your credit cards.

Do you really need them all? What are they costing you, and what affect are they having on your credit rating?

Its good practice anyway to review your credit card terms once every three to six months just because often card issuers will have made a promotional initial offer (like 0% on balance transfers for 6 months) to gain new business, but once the promotional period is over charges or interest rates may return to their higher normal rates. You maybe better off switching credit cards, or even closing some accounts. So how should you compare and rate your plastic?

Do:

* Consider closing unused or idle accounts. These accounts could be charging you unnecessary fees and are often targets for identity theft. Close the accounts with low overall benefits or with annual fees and higher interest rates first.

* Be aware that you can put the brakes on accounts that have a high interest rate and an outstanding balance. Ask your credit card issuer to close the account to new charges and then pay down the balance as quickly as you can. This is a good way to reduce overall costs. If you have to carry an outstanding balance, make sure it’s concentrated on the card with the lowest interest rate, or consider a new 0% balance transfer credit card, and then close the more expensive ones.

* Periodically check your credit reports online to see the status of your accounts. Look for wrong information on late payments, high balances and signs of identity theft. Your credit report reflects how lenders look at how financial responsible you are, make sure all the information there is accurate and up to date.

Don’t:

* Be careful closing your oldest credit card account, this may have an affect on your credit rating as card issuers and lenders like to see a long track record of borrowing within the cards terms and conditions.

* Don’t close several accounts all at once. Gradually paying down and closing accounts is the safest way forward if you’re unsure about the impact on your credit score or the amount of debt you need to carry. If you want to cancel several credit cards, space the closures over time reducing the chance of attracting negative attention from potential future lenders, say if you want to get a personal loan or mortgage.

* Its good to concentrate outstanding balances on cards with the lowest interest rates, but don’t overload any one or two cards. Your credit rating looks best if you’re using less than 50% of your available credit limits.

* Watch out for closure charges when comparing costs. It maybe that if you give notice to close the account on a certain date in relation to your last payment that you can avoid the charges.

* Continue to check your credit history online after closing any accounts to ensure that the information registered about the account is correct.

Though all of us have credit cards and credit card debt is touching alarming proportions, but the fact remains that a huge section of the population are not even aware of card debt consolidation and how the system works. And that is why many people are surprised when they hear about card debt consolidation. The system works by combining the debts from all credit cards into one that becomes a part of a new plan. What is achieved through card debt consolidation?

When there are too many cards and you have outstandings on them all, you try the perfect balance by trying to keep all of them happy by juggling the bills. This becomes risky as when you keep making a part payment for long periods of time, the interest keeps growing. Until someday the situation can go out of hand. Instead with card debt consolidation, you just have one where there is a single annual fee, processing charge, and just one creditor to repay.

Card debt consolidation is also a great time saver. Last month, I ended up paying back after the last date was gone simply because I did not have the time to go to the drop box. And this has happened more than once. Since when you do card debt consolidation you have to deal with just one company, you end up saving a lot of time in writing checks, going to the mailbox, or even paying the bills online.

There are other benefits as well. When you are consolidating all card debts into one, you are sure to benefit from lower interest rates. So if you opt for card debt consolidation, you can reduce the rate to as low as 1% even. Otherwise it can be really steep.

Being down in credit card debt can be a nasty experience with debtors always calling up to inquire about pending payments and making cold offers for balance transfer. It can become humiliating and a lot of hassles. Card debt consolidation will mean an end to all these problems. It will take you just 5 minutes to complete the application process. But make sure that you are doing it from a secured site.

Card debt consolidation will not only make your life easier but will also make economic sense. When you decide on card debt consolidation you will owe money to just one financial institution, have just a single card and will even get a better credit limit – it might even be higher than the credit limit you had of all your cards together. This is because the card company acknowledges that you are on your way to financial recovery with card debt consolidation.