It seems easier than ever to get a credit card in America these days, with so many different companies offering seemingly great options for customers. However, credit card debt can swiftly rise without careful financial management. Business Insider reports that at least Michigan has one of the lowest average rankings of credit card debt in the nation, with households holding about $6,082 in debt. This can still lead to a precarious financial situation for Michiganians, so consolidation is often considered as an appealing option for lowering debts.
According to the Consumer Financial Protection Bureau, a United States government agency tasked with ensuring fair treatment of citizens by financial institutions, credit card debt consolidation can make paying off debts more simple. Credit card holders are recommended to evaluate their financial situation, no matter how high the debts. By gaining a full picture of their accounts, holders can properly budget their funds and approach creditors for potentially lower payments. Consolidation can put all the debts in one or a couple of lower regular payments to make it easier to pay off those debts.
The simplicity of credit card debt consolidation can come with hidden problems, though. Some credit card holders may think that debts can be erased through consolidation, but credit reports may still show the debt history. Additionally, those who do not choose a lower interest rate that lasts for a long period of time may face having to pay high rates in the long run, further damaging their credit. Transfer fees can also substantially contribute to the bottom line. Choosing the right consolidation plan for an individual situation involves understanding and forethought.