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Debt consolidation good or bad

Debt consolidation: good or bad?

When trying to pay off debt, consumers thinking about consolidating debts often have one burning question: “Is debt consolidation good or bad?” Here’s a short overview of debt consolidation practices that can help you determine whether debt consolidation is good or bad for your financial situation.

What is debt consolidation?

With a debt consolidation or online debt consolidation program, you’ll take out a new loan to pay off your existing loans and debts. The theory is that if the new loan has a lower interest rate than your current debts, you’ll save money on interest each month and may be able to pay off your debts faster. Or if the new loan has a longer term, you may be able to lower your monthly payment. Either way, debt consolidation can be helpful to your financial situation.

Is debt consolidation good or bad?

The answer is neither. Rather than asking “Is debt consolidation good or bad?”, a better question might be “Is debt consolidation effective?” Debt consolidation is effective for some people - if they are disciplined about making payments and not taking on new debt. But many people who consolidate debts find that they are just as deeply in debt a few years later because of poor choices or because they didn’t truly make a plan to get out of debt after consolidating.

Is debt consolidation good or bad for people with poor credit?

With debt consolidation, good or bad credit can make a big difference. Trying to consolidate debt with bad credit is not a great idea. If your credit rating is low, it’s hard to get a low-interest loan to consolidate debts, and while it might feel nice to have only one loan payment, debt consolidation with a high-interest loan can make your financial situation worse instead of better.

How do I know if debt consolidation is good or bad for my situation?

Whether debt consolidation is good or bad for your financial situation, it’s helpful to talk to a certified debt consultant who can offer objective advice. American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling agency dedicated to helping individuals and families get out of debt for good. We offer free credit counseling sessions with highly trained and certified counselors who can help you determine whether debt consolidation is good or bad for your situation. We can show you other ways of paying off debt and help you create a plan and a budget for paying off the debt over a period of time. We also provide debt management credit counseling services and can direct you to a wealth of information about money management and credit counseling online. With help from ACCC, you can make smarter choices about your debt and create a plan to be debt-free within 60 months or less.

American Consumer Credit Counseling (ACCC) is a leading source for personalized debt management advice and programs to consolidate your debt. If you are interested in consolidating debts, contact one of ACCC's credit advisors to learn how to consolidate bills without having to take a consolidation loan as would be suggested by some other debt relief agencies. As a Better Business Bureau accredited credit counseling agency, you can count on ACCC for fair and honest help with credit issues. We are also approved by the Department of Justice to provide pre-bankruptcy counseling and post-bankruptcy credit counseling courses.

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