The advantages and disadvantages of debt consolidation
When it comes to debt consolidation, it’s important to be aware of the advantages and disadvantages before you take on new debt.
Debt consolidation, or credit card consolidation, involves taking out a new loan to pay off multiple debts or credit card balances. The advantages? Debt consolidation companies argue that borrowing money at a low interest rate to pay off loans or credit cards at a higher interest rate can save you money, or help you pay off the debt sooner. Other advantages include having fewer payments to make each month, and less likelihood that you’ll be late on payments.
What you rarely hear about are the disadvantages of debt consolidation. Depending on the terms of your new loan, it’s possible you can actually end up paying more in interest over the life of the loan, or that you’ll end up more deeply in debt.
Before agreeing to a debt consolidation arrangement, it’s important to seek debt consolidation advice from a trusted financial professional. That’s exactly what you’ll find at American Consumer Credit Counseling (ACCC), a non-profit organization dedicated to educating consumers about paying off debt and living life debt free.
Free advice on debt consolidation advantages and disadvantages
Does debt consolidation work? It can, if you work with the right partner. But it can also be a financial nightmare if you choose the wrong company. At ACCC, we offer free credit counseling sessions where you can learn more about working with debt consolidation agencies, about debt consolidation advantages and disadvantages, and about the many other ways of paying off your debt.
Our credit counselors are certified and highly experienced. Since 1991 we’ve helped thousands of individuals and families pay off their debts and make a plan to avoid debt in the future. Our counselors can answer all your debt consolidation questions, from debt consolidation advantages and disadvantages to debt consolidation qualifications. They can also provide perspective on the advantages and disadvantages of other ways of paying off debt, including debt settlement, debt management and bankruptcy.
We also offer great educational resources on our website, where you can learn more about topics such as budgeting, home ownership, saving for college or retirement, bankruptcy and credit card debt.
The advantages and disadvantages of debt management over debt consolidation
When considering debt consolidation advantages and disadvantages, we recommend you also consider a debt management plan. Rather than consolidating debt, you’ll simply consolidate all your monthly payments into one single payment to a debt management company, which takes care of paying all your bills on time, while also seeking reductions in interest rates and finance charges to help reduce the amount you owe. It’s a highly effective strategy that has worked for many of our clients.
Learn more now about debt management, as well as debt consolidation advantages and disadvantages.