Consolidating your credit cards can save you hundreds of pounds each year in interest charges, plus it makes it much easier to keep a check on your finances. Having several cards with balances on them can mean that you are paying much more interest than you need to and by moving balances onto a single card you can pay a single interest charge instead of three or four.

In order to do this you need to have at least one credit card with a large enough limit to accommodate all of the current balances you owe. So for example, if you have card balances of £3500, £2500 and £900 you will have to have a credit limit on one of the cards of at least £7000. If you haven’t then it might be worth phoning the card issuer with the lowest interest rate and asking if you can increase your credit limit as you want to transfer balances and consolidate your debts. Most issuers will consider this request providing you haven’t missed payments or exceeded your credit limit in the past.

Alternatives

There are a couple of alternatives available for consolidating your credit card debts as well, both of which can lower your interest rates dramatically.

Firstly, if your credit score is good, you can apply for a new, additional credit card with a 0% interest period and transfer all of your current balances over to that card. Once you have done this you should close the accounts on the other cards to avoid the temptation of using them again. This solution hinges on you getting a new credit card with a big enough credit limit to allow the movement of your current balances though.

The second option is to apply for an unsecured personal loan equal to the amount of your credit card balances. Explaining to a bank or building society that you want to consolidate your debts can help with their decision, especially if you have a good history with them. A personal loan will undoubtedly have a much lower interest rate than you are paying on your credit cards and the monthly payment will often be less than you are collectively paying to your card issuers. It is important to shop around for the best deal and the lowest interest rate rather than go directly to the bank or building society that you hold your current account with as some places will have good rates that aren’t widely advertised.

However you decide to do it, it is beneficial to consolidate your credit card debts as often as you need to. If you do it once though and close the card accounts then you shouldn’t have to consolidate again in the future! We all know though that this may not happen and emergencies might require you to use your empty credit cards again. If this happens then keep an eye on special offers from your card issuers and consolidate your debts again when the time is right.