If you have chosen to consolidate your debts, there are three things that you need to remember. In this article, we will be presenting three mistakes that consumers often do when consolidating.
1. Not considering the costs.
Are you clearly aware of how much it will cost you to consolidate your debts? If you have decided to take out a debt consolidation loan, how much is the rate and what are the exact fees? The problem is that most lenders charge a higher rate to borrowers with less than perfect credit reports score. If you need debt consolidation, then obviously, you may not have a good score to back up your loan application.
Before choosing a debt consolidation loan lender, seriously consider all the possible fees. Don’t forget to consider the long term consequences of your choice. Do extensive research and compare potential lenders.
2. Paying someone else to distribute your payments on your behalf.
Does the debt consolidation agency persuade you to sign up for a program where you must submit monthly payments to them before your payments are forwarded to creditors? You might be given what seems like good reasons to sign up for the program but such a service may cost you even more than the current interest rates you pay.
All it takes is a personal debt repayment plan to be able to submit your payments to your corresponding creditors on time. So why should you pay an extra fee for doing you a service that you can easily do on your own? Why should you hire an agency to help you distribute your payments when you can do it yourself at no extra cost? In fact, by getting to know the facts, you can even do your own negotiation with your creditors.
3. Transferring balances at a high price.
When dealing with credit card debt, some consumers may easily apply for a low-interest balance-transfer credit card as a way to consolidate. While this can work, it’s important to make sure that you’re transferring to the right credit card.
Some balance transfer cards charge extremely high fees for each balance transfer. Even worse, the low interest rate may only be applicable for a few months. Afterwards, you might be left with a large balance in your account that you must pay under an even higher rate.
About the Author:
Suzy Vanstrusen is a credit analyst and a writer on the website EZCreditRepairSolutions.com. She has been providing consumers with tips and wise information about credit repair as well as helping you out more with your bad credit loans. Copyright © 2011