If you’re drowned in a huge amount of debt and are looking for ways to get out of the same, considering debt consolidation may be a viable option. But the question lies as to “Is debt consolidation good?” If this is the question that is bothering you, then you need to review the options prudently before consolidating your debts. Debt consolidation is a good option if you’re struggling with multiple debts. You can combine all your debts and make single monthly payments to only one creditor. Debt consolidation involves many options like debt consolidation loans, balance transfers, credit counseling, etc. Read on to know more about it.
- Credit counseling: When you are going through extreme financial distress, you can opt for credit counseling. They are also referred to as debt management programs. These companies do not lend you money but they negotiate with your creditors on your behalf. They provide you debt relief by referring you to certain debt relief programs like debt consolidation programs and debt settlement programs. You can reap the benefits of lower monthly payments, lower interest rates and elimination of late fees. Thus if you are wondering “Is debt consolidation good,” you can be certain that it is perhaps the best way to get rid of debt by seeking professional help.
- Balance transfers: This is another very common method of consolidating your debts. If you’ve got a credit card with a low-interest rate, you may consider transferring all your high-interest loans to the low-interest card. But be very careful about the teaser rates and check when the introductory period is going to end. They typically last for a short period of time and it is best if you can transfer your entire balance before the teaser rate expires. Check whether or not there are balance transfer fees. If you can transfer your balance to a low-interest card carefully, you can successfully consolidate your debts with such a method.
- Debt consolidation loan: You can apply to most financial institutions for getting a debt consolidation loan. There are two types of debt consolidation loan, secured and unsecured. Unlike a secured loan, no collateral is required in the unsecured loan. Secured loans generally constitute home equity loans or second mortgages and you already secure your house against such loans. Thus, before consolidating too many unsecured debts into a home equity loan, consider your affordability, whether or not you will be able to make the payments on a monthly basis.
“Is debt consolidation good?” This is a common question asked by debtors. After reading the article, I’m sure you’ve reached the conclusion that debt consolidation is certainly a good idea if done cautiously.