There is a better way to engage in credit transactions when interest rates are down. Rolling all credit lines into one, results in a much lower interest rate. This move is more commonly known as debt consolidation.
The obvious goal of debt consolidation is relief. Most debt consolidation packages have zero interest at the beginning of the term and would gradually increase as time goes by. It is noticeable that once the credit lines have been consolidated, you might be tempted to make purchases without regard for the amount borrowed; after all, the credit line is zero-rated. However, as interest begins to be charged, you will find yourself in a deeper hole. So instead of being a relief, debt consolidation will now become a burden more unbearable than before you have consolidated your debts.
So, to make this strategy work to your advantage, you have to keep interests and other charges at a minimal level by paying the maximum amount in the quickest possible time as possible. Maintain your credits within a level your means can pay.
In other words, debt consolidation is not for the impulsive buyer who has difficulty controlling his impulses. Those who are already into heavy borrowings should not engage in debt consolidation. Remember, credit organizations that share information and borrowers with low credit scores are considered high-risk borrowers and are normally meted with higher interest rates.
Debt consolidation is advised to borrowers who have extreme purchasing discipline. It is wise to consult with a credit counselor if debt consolidation is indeed for you. Don’t be counted with the 70% of borrowers who fueled their credit woes with unwise application of debt consolidation.