Debt consolidation consolidation

Which is the best way to get rid of your debts? If this question was asked to debt counseling services the answer would be a chorus of debt consolidation consolidation. This is because debt consolidation makes repayment easier and smoother.

Debt consolidation can be done in three different ways. The first is to through the credit counseling companies. These companies speak to your creditors on your behalf and seek deals that can lower your monthly payments or reduce the rate of interest. After this, they add up all the debts and ask you to make a single monthly payment to them. They, in turn, make the payments to your multiple creditors.

The second way is to transfer your credit card balances to a single card. The best way to do this is to wait for a 0% balance transfer offer. The moment a credit card company makes such an offer transfer you should transfer your entire outstanding amount to this company. This helps you to stop paying interest till the time 0% offer lasts. It also saves you the bother of paying several credit card bills every month, and getting penalized for late payments.

The third method is to take a debt consolidation loan from banks, finance companies or credit unions. These loans can be either secured or unsecured subject to the size of the loan and the financial capability of the lender. However, keep in mind that when you apply for such a loan, you have to put up collateral such as your house. You can end up saying goodbye to your house if you default on this loan.

There are several things that you must keep in mind while negotiating a debt consolidation loan. The first is that you should be careful of companies that promise to make you debt free for nothing.

The second is to scrutinize the rate of interest associated with the loan. You should choose the loan that is most appealing for your particular financial situation. Keep in mind that debt consolidators are meant to decrease your interest rates, and save you money rather than the other way around.

The third is to curb your spending impulses. No loan schemes can help if you keep splurging on irrelevant articles. Financial discipline is the key to leading a debt-free life.

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