Debt consolidation begins by taking inventory of all the different debt sources. Most consumers have at least one credit card, a car payment, and a mortgage. The mortgage will be the most challenging debt to handle. Because of this, it should always be the last part of the debt to deal with and is a separate matter entirely.
When it comes to mortgage debt consolidation, only commit to it if absolutely necessary. Typically, extraneous fees can erode many of the seeming benefits of mortgage consolidation or refinancing.
In debt consolidation, the focus is typically on the consumer market sources, specifically credit cards. Borrowers who have a lot of debt often have multiple sources of debt. There is little reason why someone needs more than perhaps two credit cards.
Anything more is counter-productive, as it begins to actually decrease credit score and become too distracting and difficult to juggle. A typical strategy is to have two credit cards. One will remain empty and be utilized as a potential emergency account. The limit here is often the higher of the two.
The Active Account
The other credit card acts as the main account. It is the one that can be used commonly. Some people use their main card every month, with the goal to pay it off at each due date. The balance should also stay within 50% and ideally only 25% of the total balance. A card with a limit of $2,400 should not necessarily mean the total amount charged every month is $2,399.
The active card should be a tool to build credit and the emergency card is just that. Anything more, and it could be needlessly stressful. People accumulate debt because they can, but they have to give it a purpose. Borrowers can discover more here.
Every credit card has a role to play. If it is only a secondary card with little obvious purpose, it can be paid off and left empty. Some may even close the account, though that could affect average credit history and open accounts on a credit score. Regardless the strategy in stockpiling credit cards is obtuse and demanding. Having one or two functional cards with a purpose will go much further.