The Disadvantages and Negative Aspects of Debt Consolidation

Consolidating your debts may seem like the quick fix to monetary troubles, but in reality it may just lead you to digging an even deeper financial hole. Consolidation advertisements promise not only reduced participation rates, but also lower monthly payments by almost 50%. However, there is definitely a grasp to the consolidation offer. Here are a few of the main disadvantages of a consolidation program:

1. You must be current on your debts: Most consolidation companies require that you be current on all of your accounts. Thus, if you are wrongdoer on any of your accounts, it may be difficult to enter into a program.

2. Administration fees and monthly food fees: The consolidation company charges you for their services. This money could be going to paying off your debt.

3. Affects credit score: Your credit score will be affected by joining a consolidation program.

4. No missed payments: If you are late on one monthly payment you can be dropped from the program.

5. Doesn't help you reject debt: The reality is that most people don't complete solidification programs because they aren't aimed at eliminating your debt. In fact, season the debaseed interest rate does mean less interest monthly, the lower monthly payments means that the debt will take longer to pay off. In essence, more of your monthly payment goes to paying off interest and not the balance on the card. Most individuals find themselves in worse debt then before because all they have done by joining the consolidation program is spread their debt out over a longer period of time.

The only true way to eliminate debt is by changing your spending habits. Debt consolidation in theory could be a solution to financial troubles, but unfortunately it doesn't battalio! n individuals to improve their financial habits, thus it becom! es just a temporary solution to a much larger problem.

Finally, if you are finding yourself in a financial situation requiring you to consider debt consolidation as well as other options, this might be a sign that you should seek some form of professional help. An expert may be able to give more insight into you personal situation and help you organize a plan to achieve financial independence.

Scott Wallitsch is a consultant for DebtorSolution. To find out more surrounding Debt Consolidation, go to see our website or email us at Info@DebtorSolution.com.

master card gift cards
refinance mortgage