Credit card consolidation loans can make a huge difference to your monthly outgoings if you have a number of credit cards with outstanding balances. Instead of paying the massive amounts of interest that the credit card companies charge you can often get a lower rate of interest together with a lower monthly payment. So are credit card consolidation loans all good news?

Well unsurprisingly no they aren’t. As with any other financial product, credit card consolidation loans require some very careful consideration before you decide whether or not they are for you.

The most important thing that you have to consider is how much they are going to cost you. Not just the short term because that will almost all ways be better than the amount you are currently paying. It’s the long term cost that can be the sting in the tail with any kind of debt consolidation loan.

As a smart shopper you need to do the math on whether the amount you will pay over the life of your refinancing will be worth the monthly reduction in your outgoings. Sit down with a calculator and a pen and figure out the monthly payment of the loan multiplied by the term. Then do a similar calculation with your outstanding credit card balances taking the monthly minimum payment. That’s usually about 5% but check, your card might be different.

If you feel the difference will be worth it for you then start shopping around for the best interest rate and term you can find. It’s important that you don’t jump in and take the first offer. While it’s not the buyers market it was there is still some competition out there and you need to exploit it to your advantage. After all, over a few years all those dollars soon mount up in your favour.

If you’re a home owner you will find that you can often get a much more favourable rate if you take a loan which is secured on your property. Be very careful with this type of deal and be sure you cost it out based on how long you will be spreading the length of the loan over.

Done carefully you can save yourself a great deal of cash by refinancing your cards but only if you go for the very best credit card consolidation loans.