Debt Reduction and Credit Card Consolidation - Which is Better

Debt reduction is paying off your bills, while credit card consolidation is keeping the bills in existence by using another source to pay off the debt. Therefore, using credit cards to consolidate your debts is not as effective as plain debt reduction.

For one thing, credit cards often have high rates of interest, and will often lead you into deeper debts. In fact, credit cards are one of the leading causes that debtors seek out debt consolidation solutions.

Rather than moving your debt over to credit card consolidation, it is much better to work to reduce your bills. What you need to do is find a way to decrease your debts.

Let's say you owe money for your mortgage, insurance, utilities, car payments, and other bills that add up to $1200 per month. Is there a way you can reduce this amount? Absolutely. Can you find a mortgage that will refinance your loan and help you to combine the monthly bills into one payment? Yes.

There are loans available that offer cash back, underpayment, and overpayment plans; as well as loans that will wrap your bills into one, combining the bills and adding them to your monthly installment.

Do not misinterpret this: your utilities are your responsibility. But for the most part, your car payment, mortgage, and any credit cards or other loans will be rolled into one monthly payment.

Therefore, if out of the $1200 you are paying up to $800 per month toward car payments and mortgage, you may find a lender who will reduce this amount to about $600 per month.

A few more ways to save money: Get a loan that offers cash back and use the extra money to pay off your debts, reduce your grocery bills by using coupons or watching for sales, and shop around for cheaper house and car insurance.

Very simply, in the long run debt reduction is much wiser than credit card debt consolidation.