Even if debt consolidation seems certainly attractive as it’ll allow you to pay, for example, all your credit cards debt into a single payment, you’ll still have to do your research before jumping right in. Here’s what you can do to determine if debt consolidation is perfect for you:
- Calculate all your credit card debts along with their interest rates. Note how long it’s going to take for you to be able to pay them all off. Compare it to the length of time available in the debt consolidation option. If you’ve seen that it will take you faster to finish paying your credit card bills individually, then it might do you good to steer clear of debt consolidation.
- Make sure that the amount of money you’ll be paying for debt consolidation is at least the same amount as what you’ll be paying for your credit cards individually. If it appears to be a bit more but it fits your budget, you might want to opt for this one instead of going for the lesser amount, which often means higher interest rates and longer paying time.
- Debt consolidation loans will help you pay off your credit debts, but this doesn’t mean you’ll be safe from debts in the future. If you think you’re likely to arrive at the same situation again, buried in debts and struggling to pay it off, then a debt consolidation loan might just add to your problems. The last thing you want is clearing off your debt, then slowly building them up again. This won’t help you in the long run.