It’s tempting to pay off all those credit card debts with a new loan, then make just one monthly payment. Most consumers who use bill consolidation or take out debt consolidation loans end up throwing good money after bad.They usually build an even more towering mountain of debt in just a few years because they didn’t change their spending habits.Bill consolidation is the process of combining multiple credit accounts into one loan.
Ideally, this new account or loan will have a lower interest rate than the accounts had previously.
The main advantages of this are: There are many types of bill consolidation, from student loan consolidation, to credit balance transfers, to home equity loans and other forms of secured debt consolidation.
In all cases, the consolidation just covers up a problem.
It doesn’t give consumers the resources they need so that they don’t have to rely on credit and can begin to build a healthy financial future. For example, when consumers get on a longer repayment schedule, they end up paying more over time, even if the interest is lowered some too.
And, some forms of consolidation are extremely risky.
For instance, if you can’t make your payments on a home equity loan, you may lose your house.And, if you don’t pay off your new credit account quickly, you might be dealing with an astronomical interest rate and a damaged credit score after using a balance transfer. Fortunately, there is a better tool for leveling mountains of debt.Nonprofit consumer credit counseling services agencies like Clearpoint Credit Counseling Solutions stand ready to help consumers restructure their personal finances and build better habits for the future.Rather than just trading one debt for another, debt management with one of these agencies will allow you to restructure your existing unsecured debts so you can pay them off more quickly.Here are the types of debt we can roll into one payment for you: Our credit counselors at Clearpoint work hard, not just to get you lower interest rates with creditors but, most importantly, to educate consumers on taking control of their finances, helping them change old habits and conquer debt once and for all.A debt management plan can be a great tool to help some people organize their finances and get spending under control. The answer is “yes” if you: A certified consumer credit counseling expert can review your personal financial situation through an obligation-free budget counseling session.