 |
Is Debt Consolidation For You? |
|
|
Submitted by Cheryl Adams
| RSS Feed
| Add Comment
| Bookmark Me!
It’s extremely easy to use credit cards beyond your ability to pay for the debt, especially when credit card companies are charging high interest rates on the amount you charge. If you happen to make a late payment, then you’ll be paying even more with late fees on top of your monthly payments and interest.
When credit cards and other debt get out of control, many people start looking for options to improve their financial situations. With so many choices, including debt consolidation loans, self debt reduction, debt management plans, credit counseling services and even bankruptcy, it can be overwhelming and confusing to figure out what is your best option for the fastest repayment of your debt.
Debt consolidation is more than just a debt consolidation loan. Other forms of consolidating debt includes some forms of credit counseling, and balance transfers so it’s important to weigh your options carefully in order to find the solution that will work best for your unique financial situation.
Credit Counseling Debt Consolidation
Many credit counseling programs provide debt management programs that allow you to make a single monthly payment each month. While they don’t actually pay off your debt into a single loan, as the consumer you are making a single monthly payment to the credit counseling agency (who then pays your creditors on your behalf), so it is very similar to paying off debts with a debt consolidation loan as far as your monthly payments are concerned.
Balance Transfers
If you have a handful of credit cards with high interest rates, sometimes it can be beneficial to consolidate them by moving them all to a lower interest rate credit card. Just be sure to pay attention to the promotional offers with the lower interest rate credit cards- to make sure that you have a long period of time of low (or even no) interest. Also be sure to check to see what your interest rates will be once the promotional period ends, to make sure it isn’t going to jump sky high after a few months.
This is a debt consolidation procedure that should only be used occasionally to make it easier to pay off a few credit cards; and is not advisable to be used repeatedly or for individuals with excessive monthly debt.
Debt Consolidation Loans
In most cases, individuals who have several credit card accounts and/or unsecured loans can benefit greatly from obtaining a new loan that is large enough to pay off each of the smaller accounts. The debt consolidation loan can either be another unsecured loan from the bank or a secured loan if you own a home or vehicle. Using secured loans is always a little risky because if you are unable to make the payments the loan provider can take your collateral (your home or your car, for instance), so consider this option carefully before signing the papers!
How to Choose a Debt Consolidation Option
The most important aspect to consider when trying to decide whether to consolidate your debts is whether or not the new monthly payment for the consolidation is going to save you money on your monthly budget for expenses, and whether or not it is going to save you from paying interest and fees over the long term. In most cases, a debt consolidation (whether you decide to get a loan, use a balance transfer or a debt management company) is going to save you money over the long term and help you pay off your debts faster.
|
|
|
|
|
LinkedIn Recommendation:
 Junko Dohn - Search Engine Optimizer at Carry's Candles - I was impressed by the features of Teo's blogging system and hired him to create one for us. It's easy to work with and allows commenting, single sign on, and has so many options I hadn't considered. I am very happy where this is going and will have a much better service than I planned. I recommend Teo for designing any type of web system that involves complex processes - March 19, 2012, Junko was Teo's client |
|
Featured [Debt Consolidation] Articles:
|
|
