Consolidating debt pros and cons

22 Jan

The best way to consolidate credit card debt under ,000 could be to get a zero-percent interest credit card and transfer balances from high-interest credit cards over to it.

You also could look at a personal loan to pay off your balances.

The problem with these advertising spots is that they only talk about the benefits. When you consolidate your debt, you are taking multiple payments and putting them into one. Along with this, you no longer have to decide who should get paid first and how much you should send each creditor.2. How much money are you paying out in interest every month?

When done correctly, debt consolidation can: There are several ways to consolidate debt, depending on how much you owe.So when you get a debt consolidation loan, you can look forward to a certain amount of personal attention.Pro #2 — Interest rates are usually pre-set by creditors, so the debt consolidation firm handling your loan can definitely get lower interest rates and reduce (or even eliminate) late fees better than you can.Such loans also tend to offer a longer repayment period.So if you want to look at the pluses and minuses of debt consolidation for your personal situation, you might want to start by considering your monthly cash flow — and ask yourself the following questions: Pro #1 — When you opt for debt consolidation, you have only one creditor to pay, and that company will call your creditors and negotiate on your behalf.This helps eliminate mistakes that result in penalties like incorrect amount or late payments.There are three major types of debt consolidation: Debt Management Plans, Debt Consolidation Loans and Debt Settlement.The average college grad leaves school with ,000 worth of debt.But if you switched majors, transferred colleges, or went on to graduate school, you may be among the 19% that owe ,000 and above, or the 5.6% who owe more than 0,000.That's where debt consolidation and other financial options come in.Consolidate Your Debt Now Debt consolidation is combining several unsecured debts — credit cards, medical bills, personal loans, payday loans, etc. Instead of having to write checks to 5–10 creditors every month, you consolidate bills into one payment, and write one check.