Credit card debt has become an increasingly pressing issue for millions of Americans. That’s because, unlike other forms of debt, credit card balances can quickly spiral out of control due to the high interest rates these borrowing tools come with — and how little the minimum payments impact the balance. 

One sign of how widespread the credit card debt issue has become is the recent uptick in maxed-out card users, with about 20% of cardholders now at their borrowing limits. Credit card delinquencies have also been climbing, showcasing how truly strapped many borrowers have become. But perhaps most startling is the fact that credit card debt has reached $1.14 trillion nationwide, a new record high.

While there are various solutions available for those grappling with credit card debt, debt consolidation can be a particularly appealing option. By combining multiple high-interest debts into a single, more manageable payment, debt consolidation can offer a path to financial relief. And, there are a few reasons borrowers may want to pursue it this September, in particular. 

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3 big reasons to consolidate your credit card debt this September

Here’s why credit card debt consolidation could make sense to pursue this September:

Loan rates are likely to fall in September

One of the most compelling reasons to consider consolidating your credit card debt this September is the anticipated decrease in loan rates. The Federal Reserve is widely expected to cut the cost of borrowing by at least 25 basis points at its September meeting, a move that would have a ripple effect across various lending products. This reduction in the federal funds rate typically translates to lower interest rates on consumer loans, including loans used for debt consolidation.

For those looking to consolidate their credit card debt, this potential rate cut could mean substantial savings. Debt consolidation loans and home equity loans, two popular options for rolling multiple credit card balances into a single debt, are likely to become more affordable. By taking advantage of these lower rates, borrowers could significantly reduce the overall interest they pay on their debt, potentially saving thousands of dollars over the life of the loan.

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Credit card rates may not follow

While loan rates are expected to decrease, credit card interest rates may not follow suit, at least not to the same extent or with the same speed. Unlike lenders that offer personal loans or home equity products, credit card issuers are often slower to adjust their rates in response to Federal Reserve actions. In turn, any impact that the Fed decision has on card rates is likely to be minimal — and probably won’t provide much relief to cardholders. 

By consolidating credit card debt into a lower-interest loan this September, though, borrowers can potentially lock in significantly lower rates than what their credit cards are currently charging. This move could provide immediate relief from high-interest charges and accelerate the debt repayment process. Plus, if credit card rates do eventually decrease, the reduction is unlikely to match the savings offered by a well-timed debt consolidation strategy.

The longer you wait, the more your debt compounds

Another big reason to consider debt consolidation this September is that credit card debt doesn’t stand still — it grows, and often at an alarming rate. Credit card balances are subject to compound interest, meaning that interest is calculated on the principal amount borrowed and also on the accumulated interest from previous periods. This compounding effect can cause debt to snowball rapidly, making it increasingly difficult to pay off.

The longer a balance is carried on a high-rate credit card, the more it will cost in the long run. By waiting to address credit card debt, borrowers are essentially signing up for larger future payments. This is particularly concerning given the current high interest rate environment, where each day of delay translates to more interest accrued.

Consolidating credit card debt in September can put an immediate stop to this growth. By transferring high-interest balances to a lower-interest loan, borrowers can halt the compounding effect and begin making real progress toward paying down their principal. 

The bottom line

With loan rates likely to fall, credit card rates remaining stubbornly high, and the ever-present danger of compound interest, consolidating your credit card debt now could lead to significant financial benefits. By doing so, you can potentially save money, simplify your finances and put yourself on a clearer path to financial stability. That said, it’s important to carefully consider your unique financial circumstances before doing so, but for many, this September could mark the beginning of a journey toward a debt-free future.