Debt Consolidation Loans

Good debt consolidation loans are loan programs that will help reduce your interest rates, eliminate late-payment fees and lower your monthly payments.

Considering a debt consolidation loan for multiple credit card loans may be appealing if you are overwhelmed with credit card debt. Instead of paying 10 different creditors charging different interest rates, a debt consolidation loan allows you to pay off the ten credit cards with one big loan.

These consolidation plans are typically through consumer credit counseling services that arrange for you to pay off your debts within three to five years, although it may vary depending on your needs.

Since it takes the average person 10 to 20 years to make credit balances disappear this is often an attractive option, however participating in a consolidation program could affect your ability to get new credit or future loans because some creditors will put a red flag to lenders on your credit report.

Also, debt consolidation may be a lot easier, but it's not always a savings.

Before you consider this option be sure that the new consolidated loan you are going for is really saving you money. Debt consolidation loans feed on people in trouble with credit card debt so they tend to carry a higher interest rate for the convenience of consolidation. In other words you may not get the lowest-available interest rate. If there is nothing to secure the loan, they bump up the interest rate.

As with anything you buy it's a good idea to shop around first, however before you do that, calculate the interest and fees on your existing accounts to figure out the payments you currently make. Compare those amounts to a consolidated loan to find out if it's actually a better deal.

Always check with credit unions instead of banks. They tend to offer better interest rates and customer benefits.

To learn more about debt consolidation, call the National Foundation for Credit Counseling at (800) 388-2227.

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