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Can I keep using my credit cards after debt consolidation?

Can I keep using my credit cards after debt consolidation?

If you are having trouble paying off your credit card debt, or if you just want to get your debt paid off faster, debt consolidation is a great financial tool.  This method of debt management pays off all of your existing credit card debt and replaces it with a single, easy to manage loan.  Most of the time, this loan will have a lower interest rate than your credit cards, and a lower monthly payment.  That means you can pay less every month and pay less in interest over the life of the loan.

Because people talk about replacing their credit cards debt with a debt consolidation loan, a lot of people assume that debt consolidation means that they can no longer use their credit cards.  In fact, debt consolidation only reduces the balances on your credit cards to zero.  It will not close your credit card accounts or change the way that your cards work. While some people choose to shut down their cards after going through the debt consolidation process, this isn’t a requirement.  In fact, a lot of people don’t want to close down their credit cards.  In some cases, they want to keep something open in case of an emergency, and/or they don’t want to shut down an account they’ve had for a long time because it might lower their credit score.

Does a Debt Consolidation Loan affect my Credit Cards?

The process of debt consolidation will not affect how your cards work.  Credit card companies will not raise or lower your interest rate because you’ve paid off your balances, and you won’t incur any fees because you no longer carry a balance from month to month.  If you want to close down your cards to prevent fraud or to make sure that you don’t run them up again, it’s your decision.  Closing down the cards or leaving them open won’t effect your loan.

If you’re trying to decide what to do with your old credit cards, check out these articles discussing the advantages and disadvantage of leaving the cards open and closed.  Depending on your personal situation you might want to have some available credit or protect your credit score.  Other people may want to close accounts immediately in order to prevent them from being misused.

About Author: Debt Help Desk

There are tons of sites and articles about getting out of debt. We are different because we are not a site owned or operated by an actual debt relief company. No bias. Our agenda is to help people make smart debt relief decisions- Now let’s help you.

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