- 11
- Oct
Well here is the scenario; you have three or four credit cards, a bank overdraft and guess what, they are all overdrawn. Throw in a few loans you have and a mortgage and soon enough you are swamped in debt. Well its not that bad; let’s say you can still afford all the repayments but it’s getting a bit out of control. So should you pool your debt into a consolidation loan?
Well, consolidating can bring down the amount you pay out in interest and remove the headache scenario of paying off multiple bills. Also you could be protecting your credit rating by avoiding the embarrassment of missing a repayment. Well at least that is what the debt consolidating companies are telling you anyway. But then again they need to be making money from you some how, so are you really getting a better deal?
Debt consolidating companies most often work by moving all your loans into one single loan with a lower interest rate. Here is the trick to making sure you get a good deal: Since credit cards typically have annual percentage rates exceeding 10% you can find cheap loans with better rates and track their progress far more easily.
The best way to get a good deal is always to do your homework. Shop around and find out the best deal that suits your needs. A general rule is the more you borrow, the lower your interest rate. Loans can be secured like when it is tied to your house, or unsecured and not tied to anything but if you default on repayments at best you will end up with a bad credit report, and at worst you could lose your home.
