Before attempting to consolidate your debt, it is imperative that you do some research on the various options available. There are three common strategies for consolidating debt: debt consolidation loans, debt management programs, and credit counseling.
Series of loans with a revolving credit line
Debt consolidation loans are a little more than just a loan. They are actually a series of loans with a revolving credit line in a short-term loan that you must repay over the life of the loan. The interest rate of the loans will differ, and the monthly repayment amount is set up such that it is paid off in due time.
Debt consolidation with credit counseling is often the most helpful method. The process of consolidating debt can be difficult. One of the problems with this method is that credit counseling companies are paid for when the borrower defaults on their loan. With many companies, the customer may have to pay interest and fees in order to take advantage of the services offered.
Some companies will charge a fee up front for their services and some will work out a payment plan that you agree to. With the right counseling program, you can go from being delinquent on at least one credit card to being almost completely debt free. The ability to consolidate loans helps to build wealth in your life.
Helpful if you are unable to pay off your debts
Debt consolidation can be particularly helpful if you are unable to pay off your debts because of a death in the family or other reasons. While debt management programs can still help to keep you from being evicted or unemployed, they can also be very stressful and expensive.
Debt consolidation offers you the opportunity to take out a small loan and pay off all of your high interest debt at once. The interest that is paid may seem high, but paying back your debts over time will save you in the long run. Your monthly payment may be lower than what you were paying before and the payoff period may last longer.
When considering debt consolidation, consider the amount of money you currently owe on each of your bills. If you are serious about debt consolidation and need help, it is important to follow the guidelines that come with it.
If you can’t easily make all of your payments each month, you will need to consider applying for a personal loan instead of using credit cards to pay off your bills. You will have to pay a higher interest rate for the loan, but you will pay it off faster and you won’t have to worry about late fees or collection agencies getting involved.
Your best bet is to work with a reputable lender
If you feel you are a candidate for debt consolidation, your best bet is to work with a reputable lender who will not interfere with your ability to use your credit cards or payday loans. They should be able to provide you with a loan in a matter of days and you will have money on your line each month.
It is important to remember that your payment will not be made on time. Do not expect your creditors to be happy with you if you don’t pay off your debt. In fact, your debt consolidation lender may even report your late payments to the credit bureaus.
If you are serious about debt consolidation, always use a different loan to pay off your old bills and do not get any new credit cards, no matter how tempting the interest rate may be. If you continue to take out new credit cards, the companies will report your delinquent accounts to the credit bureaus and your credit rating will likely suffer.
Following the steps above will help you find the right debt consolidation for payday loans and credit cards. Remember, if you truly want to become debt free, the best option is a good, sound plan and the right debt consolidation adviser.