Is debt consolidation something that you have heard about? Chances are you have, but you may not realize how it could benefit you. If you’ve got a bunch of bills that you’re struggling to pay each month, a good debt consolidation program will make your life easier. The important thing here is to make choices wisely. This article will help you understand how these programs work and whether they offer a viable option for you.
Before debt consolidation, check your credit report. This is the first step to fixing your debt issues. Know how much debt you’ve gotten yourself into, and who the money is owed to. Without this information, you may struggle to find out who you need to be paying.
Never select a debt company simply because they claim non-profit status. Non-profit does not always mean that it’s great. A good way to verify the reputation of a business is to consult with the BBB.
Sometimes, a simple call to a creditor can get you better terms on your account with them. Many creditors are happy to help debtors who are trying to pay off their debt. Don’t be afraid to pick up the phone and talk to a creditor to see what they can do for you.
When seeking a consolidation loan, look for low, fixed rates. If the rate is not fixed, you may not know how much you’ll need to pay monthly. Search for a loan that give you decent rates, allowing you to be in a better position than today.
Credit Card
Often, a new credit card with a low interest rate can be useful for consolidating some debts by paying them off using the new, low interest credit card. This will reduce the number of payments you have and reduce the amount of interest you are paying. Keep in mind that the interest offer that comes with the card may expire at some point, and you should consider paying off the debt before that deadline.
Are you a homeowner? If so, it may be a good idea to refinance your home and use the extra cash to pay off some of your debt. With mortgage rates at their lowest, this is a good time to refinance and take care of your other loans. Also, you may find that the payment on your mortgage is lower than before.
Call your creditors and ask if you can negotiate lower interest. A lot of creditors will settle for a balance for a lump sum that’s as low as 70 percent from what’s owed. Your credit ratings won’t go down. In fact, it may even go up.
If you have a 401-K, you can use it to reduce your debts. Borrowing from a bank or from another financial institution will probably cost you more than borrowing against your own 401k plan. Before doing this, be sure you understand all the terms and conditions associated with such a risky transaction.
Find out what their privacy policy is. See what sensitive information they store and how it is protected. Even ask if their system uses encryption to further protect your information. If it isn’t, you can be at risk of getting your identity stolen by computer hackers.
Consider the fees that you’re going to be paying to the debt consolidation company. All fees should be clearly stated and explained so that you can assess the total cost of them. They have to perform a service before asking for any pay. Avoid paying set up fees just to have an account opened.
Debt Consolidation
You need to know the physical address of the debt consolidation company. Certain states have no licensing requirements that debt consolidation companies must have. You’ll want to ensure that the company that you’re using is not located in those states. You can find out this information with a simple search.
Debt consolidation might offer you some relief from financial troubles, but only if you research your options and make a wise choice. Consider the pros and cons of every program, and let the tips in this article guide you toward what you should be looking for and what you should beware of. Then, you’ll be making the best decisions possible.
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