Financial Advice Q&A

New Member
Posts: 1
Question
Should we consolidate our credit cards?
[ Edited ]

Help... My husband and I are thinking of consolidating our credit cards in order to hopefully save money and pay them off quicker. 1 should we consolidate ? 2 who should we talk to about consolidating if it a good idea. Thank you !

Other Answers: 1
Community Manager
Posts: 1,009

As you might imagine, we get various forms of this question quite often.  Here’s my typical lighthearted but serious response: Debt consolidation is like dynamite; in the right hands it can do a lot of good, but if used incorrectly, it's pretty dangerous.  So the question is, are yours the right hands or the dangerous ones? 

 

Here are a couple points to help you decide:

 

Behaviors and Mindsets
First, you generally shouldn’t consolidate your debt until or unless you’ve fixed the behaviors and mindsets that caused you to end up in debt in the first place. Ideally you’ll have implemented a budget and built up at least a small emergency fund – or at least have a plan to do this as you consolidate. If you don’t take these steps it’s typically just a matter of time before you find yourself with even more debt – the consolidation loan and new debt that will arise due to continued overspending and not having money in the bank.

 

Interest Costs and Repayment Terms
The next thing you want to look at is the interest costs of the debt you currently have versus what it will cost to consolidate. If we’re just talking about credit card debt, this is usually pretty straightforward; ultimately you want to lower your rate.  However if you were adding other loans into the mix you’d want to be aware of how close they are to being paid off since the interest expense component of each payment typically drops as loans get older. Generally, I’m in favor of consolidating debts only if it results in you paying less interest over time.

 

Where to Get Help
If after reading these first couple points you’ve concluded that consolidation makes sense for you, I’d encourage you to contact our bank to discuss your options.  You can reach them at 800-531-8722.

 

Thanks so much for your question.  I hope this helps and I wish you all the best!

 

Scott

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