Credit card debt has become nightmare to most of the Americans, especially during economy downturn. When this debt issue is unavoidable, you are advised to face it with full courage. You are suggested to get rid of the debt gradually through debt consolidation.

Do you know that you can actually lump all the outstanding balances on your credit statements and make them into one single debt? Let me share with you some practical steps:

Step 1: Analyze your financial ability

The very first thing you must do is to assess your current financial situation. You know your financial position most. I am sure you have multiple credit cards on hand. What you need to do is to compile all your latest credit card statements and list down the outstanding amounts as well as the interest rates one by one. By having all the details, you will be able to analyze your financial ability easier.

At the same time, by knowing all the interest rates, you are able to decide whether debt consolidation can really help you to save a lot of money.

Step 2: Search for suitable loan provider

Once you have got the total debt amount, you are recommended to look for banks, financial institutions or loan providers which offer low interest debt consolidation loan. You need to spend some time to contact them and see what kind of loan packages they can offer.

If you want to save time, you can search online. Shop around to look for the best deal available. The most important is the interest rate offered for debt consolidation loan must be much lower than the interest rates of your credit cards. You need to save as much money as you can from the difference of interest rates.

Step 3: Make the right selection

You are advised to make thorough comparison between different lenders before making your final decision. There are a few matters you need to bear in mind besides interest, such as term of repayment, the monthly repayment amount, penalty for early settlement, other facilities provided, etc. Make sure that you select the right package based on your REAL financial needs. Only obtain the loan amount according to your debt. Don’t apply for extra loan.

Step 4: Pay off your debt with new loan

Obtain the loan and pay off all your credit card debts. You are reminded to ask your new lender to deposit the fund into your saving account. After that, you are the one who is responsible to make the payment to your creditors. You are reminded not to let your lender to deal with your creditors directly. This is to protect your privacy.

An IMPORTANT REMINDER here, do not swipe your credit cards anymore after you have zero balance on your statements. If you still don’t control your spending habits, you will end up with more financial burden in the future. Having loan doesn’t mean that you become debt free instantly. You still need to pay the repayment monthly. Consolidating credit card debts is just to assist you to save some costs.

Last but not the least; if you don’t want to obtain additional loan to erase your current debts, you still have another alternative. Using the consolidation concept, you are advised to consolidate your credit card debts and transfer all the outstanding balances onto one credit card.

By doing so, you are actually transferring the balance of high interest credit cards to a card which offers low interest rate. If you always shop around, you can even find some lenders which offer zero interest rate for the first 12 month.