Do you know your exact financial situation? If you find yourself falling into debt, you may not even have a clear idea of how many cards you owe money on, or the exact amount you owe to your creditors. Whether you are just beginning to rack up debt, or owe thousands, you should consider debt consolidation. The best place to go for debt consolidation advice is to experts with the knowledge to help you.Debt consolidation entails taking out one loan to pay off many others.Debt consolidation is usually done to get a lower interest rate, a fixed interest rate or for the convenience of paying only one loan. The purpose of consolidating debts is to bring together all your existing credit card, store card, personal loan, and overdraft debts into one single loan.This simple restructuring allows the individual to get a better grasp and handle on his or her fiscal situation.
If you decide to consolidate your credit card debt, please make sure that you don't continue to spend on your credit cards, as many people fall into this trap.
The main advantage for debt consolidation loans over multiple lines of finance however, is that of the interest rate. The single loan will have a lower rate of interest than separate loans, and so will save you money, making the initial amount easier to pay off.
Below are some of the Pros and Cons of debt consolidation :
Pros
- Reduced interest rate.
- Lower monthly payments.
- Single monthly payment simplifies money management.
- All debts brought together with one lender.
- As long as the monthly payments are maintained, there nothing else to worry about.
- You will end up paying more in the long run.
- It will take you longer time to pay off your debts.
- It's easy to spend money saved from reduced payments.
- Could mean even more debt to consolidate at a later time.
- It addresses symptoms - not the causes of your debts.
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