Debt Consolidation Do's and Dont's

By Michele Lerner
Mortgage Credit Problems Columnist

If you are feeling overwhelmed by credit card debt, you may be tempted by advertising gimmicks which promise instant debt relief. But there are no quick fixes if you are deep in credit card debt. However, debt consolidation loans are available and can often move an individual along the path to becoming debt free.

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Gather your credit card information and enter a few basic pieces of information here to see if a debt consolidation loan is right for you.

Some considerations for debt consolidation loans:

  • Make sure you compare the interest rate on your current debt and the debt consolidation loan. While your monthly payment can be less than paying on multiple bills, you could end up paying more interest in the long run.
  • Instead of paying a debt consolidation fee, try to negotiate new terms with your creditors for a lower interest rate or to lengthen your repayment schedule. Some Web sites offer free debt consolidation calculators that can help you determine which credit card debt to pay first and how much you need to pay each month in order to retire the debt completely within a desired time-frame.
  • Beware of balance transfers. Transferring your balance from one card to another only stretches out your credit card debt to multiple companies rather than helping you with debt consolidation. If you are disciplined and can pay off the debt while you get the low-interest introductory rate, it could be worthwhile, but be careful that you don't end up paying higher interest later.

Enter your information on this page to see if a debt consolidation loan is right for you.

Depending on your level of credit card debt, you may be able to reduce your spending and increase your monthly payments to improve your credit and get out of debt on your own. Or try some of these alternatives:

Alternatives to debt consolidation loans:

  • Apply for a home equity loan.
  • Do a "cash-out" refinancing.
  • Refinance your car.
  • Apply for a personal loan at your credit union or bank.
  • Call your creditors to ask for better terms.
  • Talk to a non-profit free credit counseling service.

Debt consolidation can be the fastest way to rid yourself of debt problems and improve your credit.



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