Debt and Bill Consolidation

Debt and Bill Consolidation is Big Business

If you owe so much money that you're to the point of looking for debt and bill consolidation, the best advice is "look before you leap". In other words, carefully examine the "fine print" on all options you're considering. The three main forms of debt and bill consolidation are:

1. A zero percent (0%) APR credit card or some other balance transfer credit card offer;
2. Bank or other financial institution loan; and
3. Mortgage refinance or Home equity loan

Any one of these options will give you a false sense of euphoria if you have trouble managing your money. In far too many cases, those who choose to borrow more to pay off what they owe now end up in worse shape than they were originally within just a year or two. Let's look at the drawbacks of each of the above choices:

A 0% interest credit card sounds great…in fact it sounds too good to be true; and often, it is. For one thing the zero percent interest is usually just for an introductory period and applies only to balances you transfer. That part works since that's what debt and bill consolidation is. However the people that qualify for this lowest of rates are those that have excellent credit - probably not people who are most in need of debt and bill consolidation. If you're already in over your head and don't have a great credit rating, chances are good that you'll pay more. Also if you miss a payment or are even late, your 0% interest will most likely be nullified and you'll be charged additional fees to boot. Whatever your circumstance, you can be assured that the zero percent won't last. With that said, however, when used wisely balance transfers can be a fantastic option - you truly can't beat 0%!

If you decide to try for a loan for debt and bill consolidation, you may have trouble qualifying if you're too far in debt. If you can get one, the interest you'll pay could make your debt that much higher. If you are approved, check around to make sure you're getting the lowest rate possible. But remember that you're using borrowed money to pay off borrowed money.

The most popular route for homeowners for debt and bill consolidation is usually a home equity or other refinance home loan. This can work very well, or it can be the most dangerous "cure" of all. Often the borrower comes out with more than enough to pay off his or her debts, but instead of saving it for a rainy day or putting it back in the home, they go on a spending spree. The other problem is that if they have a medical emergency or lose their job, they may end up losing their house.

Before jumping into some type of debt and bill consolidation plan, do the math. Add up everything you owe and compute the interest out over the length of time you'll be paying. Then do the same with your chosen consolidation loan method. You'll most likely find that if you just hang in there and pay your bills slowly it will cost less in the long run. You can use that time to learn how to better manage your money.

To find a debt and bill consolidation specialist who can assist you in creating a customized debt solution, please complete the form found on this page.

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