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The bad side of debt consolidation

October 30, 2011 by · Leave a Comment 

Worsening economic conditions have seen the rapid rise in consumer debt and this has become one of the biggest problems faced by the people in the country. If you are one of the millions in this situation, you will be considering your options and debt consolidation will be one of them. Here are some reasons why debt consolidation fails to solve your problems.

Debt consolidation involves bundling all your debts into one debt which usually charges lesser interest rates requiring smaller payments over longer period of time.

Without realizing it consolidation can actually be more costly than the original loan repayment. It includes many hidden fees such as monthly fees, early repayment penalties and such which makes it more expensive in the long run.

Most people use the loan to repay credit card debt which again opens the opportunity for over spending. This results in the person sinking deeper in debt rather than come out of it.

If you are considering debt consolidation make sure to do a thorough background check on the debt consolidation company and if it has a registered address in Maryland or Florida beware of it as these states do not regulate debt consolidation companies, which will give you no recourse if needed.

Posted By: Mlava

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