First post so a little.. nervous?
I'm just wondering your opinion on getting a new credit card and doing balance transfers in an effort to consolidate debts. I feel like the multiple payments across multiple cards is causing me more stress than a single amount and payment. It would also cut down in stress and give me less interest.
Welcome to the community! My personal feeling is debt consolidation can be a good thing if and only if you stop using the cards. It might seem obvious, but I've seen family members do this, only to run up the original cards again. Then, they are in more debt than they started. Ideally, you could cancel the other cards, but closing too many too fast will lower your credit score.Reply
Be really sure that you are ready for this. If the spending habits that got you into this debt haven't changed, then you will end up worse off.
I have done this twice. The first time, nothing changed in our habits, and the cards we consolidated got racked back up and we were way worse then we were before we consolidated.
I have since started YNAB, and I consolidated again, this time with a low interest loan with automatic payments. My credit cards are tracked in YNAB and any spending on them has been already budgeted for. This time, the debt consolidation has been a success.Reply
Can echo that I made similar mistakes to folks above (debt consolidation + re-spending on credit cards leaving me more in debt), BUT I will say that before starting YNAB, debt consolidation allowed me to avoid a LOT of interest and reduce my monthly payments. Now with YNAB, I have a single CC that will be PIF starting next week, and the one debt consolidation loan from five years of gradual overspending. The other credit cards do live in a drawer and are never touched. FWIW, if you think you can execute a consolidation on a 0% interest card and stick to it, do it. Esp. when credit card interest rates are usually between 17-23%. But if you're worried about your habits, it's dangerous.Reply