If you have half decent credit then you get junk mail every day that tries to get you to consider consolidating credit card debt with various financial institutions and some of them seem like very familiar names. You will see names like GE Capital and other familiar names but remember that just because they use the name of a big familiar company does not mean they are still part of that company. They could have been spun off years ago and are their own organization. That also doesn’t mean that they can’t lend a helping hand when it comes to consolidating credit card debt, they can. You just have to be careful that in the process of consolidating credit card debt you don’t dig your financial hole any deeper. There is a danger to consolidating credit card debt because many companies make it seem so easy.

You’ll get these documents that look like checks made out to you for huge sums of money and it seems like the answer to getting out of your debt. The reality is that they are offering you a way of consolidating credit card debt that uses the equity in your home as collateral for a line of credit that you can use for consolidating credit card debt. You should probably avoid using equity lines of credit for consolidating credit card debt. Lines of credit are used for major expenses like college for you children or remodeling your home. Plus they are tied to your home’s mortgage and you do not want short term debt like credit cards to turn into a long term obligation. You can just throw those offers in the garbage.

What About Refinancing?

If you have not thought about it, and you own your home, refinancing may not be a bad way to take care of consolidating credit card debt. It can be an extreme measure and it will add more years to paying off your house, but if you don’t mind the idea of extending your mortgage back out to a 30 year loan then go for it. You are financing a significantly lower amount than when you originally bought the house and you can add in the amount you need for consolidating credit card debt. When it is over your mortgage payments are probably lower and your credit cards are paid off but now you have a mortgage for 30 years again. Also, the interest you pay on your home is tax deductible so consult your CPA or tax consultant for details. Some people don’t mind that and it is not a bad idea. Avoid running up the balances on your credit cards at all costs.

Do what you think you need to do to reduce your credit card debt but be careful at the same time. If an offer seems too easy or too good to be true then it probably is so you will need to be careful with that. Be smart and you will find a way to deal with it. Good luck in the credit jungle. For more information please visit Reduce Credit Card Debt.

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