Shoppers are often left in the red because of Black Friday. Holiday season does not necessarily mean buying goodies but also to contemplate on debt consolidation and save some money. Huge debts can be stressful for anyone and the sooner one is able to get out of debt the better.
Debt consolidation is the only solution for most people and financial advisors also suggest the same. There are basically four valid reasons for seriously considering consolidating credit card debts.
Firstly, you will end up saving a lot of money by doing so as the debt consolidation will move your debts from a high-rate debt to the low-rate debt. This will help in saving huge sums of money.
Life is simplified when you don’t have to keep track of multiple payments, bills, drafts, checks, due dates and so on. This will help in better financial as well as time management.
Consolidation of debts onto one card will improve your credit.
You can increase deductions as well as the taxes owed if you move the non-deductible to the deductible debt like a mortgage loan or a home equity loan.
However, McDowell suggests that one will have to be cautious. Firstly, one must simply avoid debt consolidation services that which will charge a fee to do the debt consolidation. Most of the claims made by these agencies are misleading, exaggerated, and overpriced. With some guidance and some digging around it is easy to do the debt consolidation by yourself. Paying up a fee to do a debt consolidation should not in any way offset the benefits of doing a debt consolidation or the whole exercise would be futile.
There are reasons not to consolidate debts and if you aren’t careful then you could land in a bigger mess. For example, if you have to consolidate debts from 3 cards to one card and if there are 2 cards with a credit limit of $3,000 each, then one must refrain from using those cards or will end up in another $6,000 in debt. If this happens the credit score will take a beating and getting any other card with a low interest rate will be virtually impossible.