Which debt consolidation option is best for you?

Pamela Jace By Pamela Jace, 1st Feb 2012 | Follow this author | RSS Feed
Posted in Wikinut>Money>Debt

Three ways to consolidate unsecured debts - By enrolling in a debt consolidation program, by taking out a loan or with the help of balance transfer method

Which debt consolidation option is best for you?

Are you worried about how to repay your unsecured debts? Do you have multiple debts to pay off? If yes, then you can consider consolidating your debts to repay them within a definite time period. Go through this article to know about 3 debt consolidation options so that you can choose the one best suitable to you.

You can enroll in a consolidation program to get rid of your debts. When you approach a consolidation company, it assesses your financial condition and decides upon a monthly amount that you need to pay to the company every month. It also negotiates with your creditors to reduce the interest rates on your bills/debts. When you make the single monthly payment to the consolidation company, it distributes the amount amongst your creditors on your behalf. Thus, you can become debt free within a stipulated time period, if you continue making your monthly payments. You can go for this option if you want complete professional guidance to overcome your debt problems.

Instead of getting help from a consolidation company, you can take out a loan and pay back your existing debts with that. What you’ve to do is take out a loan of an amount which is sufficient to repay your existing debts. After doing so, you continue making monthly payments to pay off your new loan. By going for this debt consolidation option, you can save the fees that you otherwise would have to pay to the consolidation company if you would’ve taken professional help; but, you’ll have to make the payments on time so that you can be completely debt free at the end of the loan term.

You can also transfer your existing credit card debts to a new card or to a card with the lowest interest rate. It is best if you can take out a balance transfer card with zero percent or relatively low interest rate offer for a certain time period. However, if you’re not able to pay back within the zero percent or low interest period, then you’d have to pay much higher interest rate on the remaining balance on the card. This consolidation option may be the best for you if you have quite a huge amount of credit card debt to pay off and you’re confident that you’d be able to pay it back within the low interest rate period.

Whatever debt consolidation option you choose, it is very essential that you plan a budget and save as much as you can every month, so that you can use the amount to become debt free fast. With this resolution and choosing the most suitable debt consolidation option, you can overcome your debt problems and lead a debt free life.

Tags

Debt Consolidation, Debt Free

Meet the author

author avatar Pamela Jace
I love to write mainly on finance related issues.

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