Debt consolidation, done right, can be an effective debt solution. Of course the operative phrase in that last sentence was “done right”. It’s all to easy to get debt consolidation wrong because there are different types of debt, which is why we put together this list of the major mistakes to avoid when consolidating credit card debt. 

  1. Overlooking the Cause of the Problem

What created the situation in which you needed to avail yourself of consolidation to get your finances back on track? Running into an unexpected medical emergency, or the loss of an income  — some freak occurrence in other words — is one thing. 

Profligate spending with no regard for the future is something else altogether. If your problem is related to the latter, you’ll need to change that behavior right now. Otherwise, a consolidation will only make the problem worse. 

This is especially true with credit card consolidation, as you’ll find yourself with a fist full of cards with zero balances tempting you to charge ”just one more thing”.

  1. Neglecting the Creation of a Payoff Plan

It’s crucial to review your current financial situation before you decide which route to go to be certain you can handle the payment that a new loan from somewhere like SoFi will bring  — along with the expenses you have that cannot be consolidated at the moment.

The smart play here is to create a spending plan based upon your income and obligations to be certain you can repay the consolidation loan in a timely manner.  

  1. Failing to Review all Consolidation Options

That zero percent credit card balance transfer offer you got in the mail can look mighty good when you’re trying to figure out how to get your debt back under control. However, a number of caveats of which you should be aware come along with that option. Chief among them is the limited time window within which you’ll have to pay off the transferred balance before interest kicks in with a vengeance. It’s a great option if you can meet the requirements, but it can be a real problem if you cannot.

A personal loan, a home equity line of credit or debt management might be better credit card debt consolidation solutions. You might also consider getting a credit card debt consolidation from an online firm such as However, each of these options also has pitfalls to consider. You’ll also need to be certain the interest rate you’ll pay on that new loan is in fact lower than you’re averaging now. This is what will get you a lower monthly payment and ideally a shorter payoff time.

The thing to do is study up on all of them to figure out which one will best serve your needs — and be workable for you — before selecting your approach.

  1. Neglecting the Creation of an Emergency Fund

Another of the things you should budget for when creating your spending plan to payoff your consolidation instrument is the establishment of an emergency fund. 

Having this cash set aside in a liquid account will help you avoid going back into debt should you lose your job or encounter an outsized expense. Experts recommend salting away an amount equivalent to three to six months of your household expenses for adequate protection. 

That money should only be used for emergencies and the fund’s replenishment should begin as soon as possible after it has been used.  

These are four of the most significant mistakes to avoid when consolidating credit card debt. This approach can be an especially effective means of getting debt under control, however there are a number of other options for debt relief to consider as well. The Federal Trade Commission has strong advice in that regard. You’d do well to check it out before you make your final decision. 

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