Cons to consolidating debt

It’s helpful to mention competing offers or plans that you’ll consider if your creditors don’t seem willing to work with you.As with any financial goal, whether you choose a credit card consolidation loan or other payoff method depends largely on your current financial situation, including your existing debts, whether you can afford your current monthly payments, the interest rates you’re now paying to your creditors, and how quickly you’d like to pay off your bills.If you’re one of the millions of Americans with overwhelming credit card debt, you may have looked into a credit card consolidation loan to tackle your debt.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.With a balance transfer, you’ll move credit card debt from all cards onto one existing or new credit card – ideally one with an introductory, interest-free or low interest rate offer.You can search for the best offers online or review offers you may have received in the mail.Something has to change, and you’re considering debt consolidation because of the allure of one easy payment and the promise of lower interest rates.The truth is debt consolidation loans and debt settlement companies don’t help you slay mammoth amounts of debt.

For a credit card consolidation loan to be worth your while, you’ll want a plan that offers a lower interest rate and/or lower monthly payments than you’re currently paying to your creditors.Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.Even if you qualify for a loan with low interest, there’s no guarantee the rate will stay low.Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt. The debt includes a two-year loan for ,000 at 12%, and a four-year loan for ,000 at 10%.Your monthly payment on the first loan is 7, and the payment on the second is 3. You consult a company that promises to lower your payment to 0 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay 0 less per month in payments?