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Scott Bilker is the founder of DebtSmart.com and the author of Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. Send your questions about money, credit, loans, mortgages, or debt, to him at: Scott Bilker, PO Box 563, Barnegat, NJ 08005-0563 or online at: http://www.debtsmart.com/askscott

Hi Scott,

I am a recent college graduate and I have accumulated about $4,000.00 worth of debt spread out in four different credit card accounts. I would like to transfer all of the balances to an account with a lower APR to save money and to make monthly payments more convenient. The problem is that I have not been able to be approved for a credit card with a limit of over $1500.00. Besides having multiple cards near their credit limit, I have good credit and always make payments on time. Is there anything that you can recommend?

Please Help!

Mary

I know just how you feel. I had the same situation when I was finished with college because I had to use my credit cards to help finance my senior year.

Here's the deal. The most important aspect of that debt is how much it's costing. The best loan is the cheapest loan, and I consider it worth the work to write four separate checks if the rates are worthwhile.

Many people make the mistake of consolidating simply because they don't like the work involved with handling many accounts. The mistake is that they consolidate at a greater rate for the convenience of having one payment. It's a personal choice to decide if it's worth a little extra in interest charges to avoid dealing with four accounts. It's not worth the extra cost for me.

If you do consolidate your accounts into one, then please do not close your zero balance accounts! If you close your accounts you close your credit options. You may need those other cards sometime in the future to make the current banks compete for your business. You always want to have credit options and the best options, in my experience, are offered by banks that you have had a long relationship.

Now let's talk about consolidating and saving money!

You mentioned having trouble getting new lines of credit to consolidate that $4,000, but there's another strategy you should attempt. Call each of your existing accounts and ask for their balance transfer department. Tell the rep, "I have about $3,000 of debt on other cards. If you (1) raise my credit limit, and (2) give me a great rate, I'll do the transfer right now. Otherwise, I have three other banks to call!"

They may increase your credit limit on the spot by a few hundred dollars, they may do as you ask, they may need to get back to you, they may say no. No matter what happens, call each bank and see what they can do. If they do give you a good offer, then transfer your balance.

If they deny your credit line increase, then be sure to get a free copy of your credit report from the credit-reporting agency that the bank used to reject your line-increase request.

And you can take that to the bank! :)

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