Consolidating debt good
Most of the time, after someone consolidates their debt, the debt grows back. They don’t have a game plan to pay cash and spend less.
In other words, they haven’t established good money habits for staying out of debt and building wealth.
It can also make it less likely that you will fall behind on your payments and risk harming your credit.
For these reasons, taking out a personal loan to consolidate higher interest debt can often be very beneficial.
Here are the top things you need to know before you consolidate your debt: But here’s the deal: debt consolidation promises one thing but delivers another.
That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.
The first is the kind you describe, where you apply for a personal loan, preferably one with a relatively low interest rate, and then use the money from that loan to pay off all your credit card balances at once.
Before entering into any debt consolidation plan, research the offer to make sure that the company is reputable and that you fully understand the terms and implications of the program.
You are only restructuring your debt, not eliminating it.
You don’t need debt rearrangement, you need debt reformation.
Even though the debt consolidation company will be making payments on your behalf, you will still be responsible for ensuring those payments are made to your creditors on time.
If the debt consolidation company fails to make a payment on time, the late payment will be reflected on your credit report.