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The financial news of in the past few months has been unprecedented for many who have been happy to live in sin with their flexible friend, the credit card. The realization that the time has come to pay for years of spending on the never-never has created a general panic now that we have witnessed the collapse of major banks and the merging of others. One benefit of the recent "credit crunch" is that it has moved many people to think about consolidating their debts and in particular, their credit cards.

Why should you endeavor to consolidate your credit cards? What pitfall should you be aware of to ensure you do not end up in deeper trouble?

Consolidating credit card debt initially involves one very important element. STOP SPENDING! The more you use your credit card, the more interest you will inevitably pay. So if you are serious about clearing your feet of credit card debt, one simple way is to start buying things you can afford to buy and resist the temptation to continue on this downward spiral of spending money that belongs to a credit card company.

A major move anyone should think about making is to transfer the balance of credit cards to a new card. Seems strange to some at first to think about the concept of getting a new credit card in order to consolidate credit card debts. Isn't the just adding to the problem? The answer is no, provided you remember that the purpose of your balance transfer card is to give you some breathing space and allow you to pay off your high interest cards that are strangling your finances.

It is in the interests of the lender to give you a new credit card with zero percent interest. They know that most people will make the mistake of spending on these new cards and this will, in the long run mean the credit card company will earn more from the customer in higher interest. The reason for this is that any repayments will be used to pay off the cheaper debt on this new card and meanwhile, the interest continues to accrue on the other credit cards that were causing the problem.

The key to consolidation is to take advantage of a new credit card with zero percent interest for a period and transfer the debt from your other cards. To make it work though, it is crucial that you DO NOT spend on the new card. Consolidating your credit cards is one way to make life easier financially in this era of the credit crunch. This is only one step you can take to reduce the pressure of living a life of debt and it will be successful provided you accept that you will have to think about spending your own money and not that of the credit card company. "Credit" is just a more palatable word for "debt". Keeping this in mind will help you to control your spending and make real efforts to reduce your credit card debt. Balance transfer credit cards will assist you in getting your finances under control, but only if you remember the golden rule: Never spend on a balance transfer credit card.

Learn more about this author, JC Campbell.
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