Cons of consolidating credit card debt
Remember, you’ll need to not only put together a budget, but stick to it as well.Consumers with too much debt, particularly revolving debt such as a credit card balance, sometimes consider credit consolidation as the answer to their financial woes.As with any major financial decision, though, consumers need to do their research before opting for a debt consolidation loan.Debt consolidation loans for borrowers with substantial credit card debt may carry a high interest rate.Unfortunately, this has tricked many people into consolidation when it was not the best decision for them. If you have a lot of debt, spread across several loans and/or credit cards, you may be paying hundreds or maybe even thousands in finance charges.
Before opting for a home equity loan to pay off a credit card balance, use a debt consolidation calculator to compare monthly payments.
And while a consolidation loan for credit cards can be a good option when you have a lot of bills to pay off, there are plenty of alternatives to consider. Review your current financial picture and goals with a financial advisor or specialist certified credit counselor to determine the best plan for your needs.
Before you do, let's take a look at the pros and cons of each option.
The following four steps will walk you through calculating how much debt you have, choosing the debt consolidation loan, setting a timeline to be debt free and teaching you how to control your spending.
If you have a lot of debt, there is a good chance that you have been thinking about consolidation and what it can do for you.
In turn, you will be able to save yourself a lot of money right off the bat.3. If you have been struggling to pay your debt, month after month, you are probably interested in lowering your payments no matter what it takes.