Is consolidating debt a good idea or worth the time?

What companies can you trust!

It may be a good idea if you are having a hard time making payments on high-interest debt. However if you are making the payments OK, you may actually be hurting yourself.

If one or two of your debts will be paid in 6 months to a year, you will have that extra payment available to do what you want very soon. If you refinance, for 5 years, you might have a lower combined payment but you will be stuck with it for 5 years where you might have had a lower total payment if you had left things alone for just a few months and paid off a couple of your debts.

If you have a home and can get a home equity loan, you can take the interest off on your taxes but it also costs money to get that loan so it may be a wash.

Just some things to consider.

One more thing, if you have a bank you do business with regularly, I would use that one to refinance. You can also check www.bankrate.com. That website can give you information about what banks are reputable and operate in your area.

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This entry was posted on Wednesday, March 3rd, 2010 at 5:33 am and is filed under consolidating debt. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Responses to “Is consolidating debt a good idea or worth the time?”

piggrumpy@verizon.net Says:
March 3rd, 2010 at 10:40 am
The best company to trust number one is the bank/s And yes consolidating loans can be good. It makes one payment virsus many. And you can walk away with extra money so to speak. Like you monthy payments all together total $800.00. If you consolidate you can and usually do lower the payment several hundred dollars. But I personally would go with a bank before a loan company. Make sure you READ the FINE PRINT. Good Luck.
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zcommodore Says:
March 3rd, 2010 at 11:29 am
It may be a good idea if you are having a hard time making payments on high-interest debt. However if you are making the payments OK, you may actually be hurting yourself.

If one or two of your debts will be paid in 6 months to a year, you will have that extra payment available to do what you want very soon. If you refinance, for 5 years, you might have a lower combined payment but you will be stuck with it for 5 years where you might have had a lower total payment if you had left things alone for just a few months and paid off a couple of your debts.

If you have a home and can get a home equity loan, you can take the interest off on your taxes but it also costs money to get that loan so it may be a wash.

Just some things to consider.

One more thing, if you have a bank you do business with regularly, I would use that one to refinance. You can also check http://www.bankrate.com. That website can give you information about what banks are reputable and operate in your area.
References :
clynnm0702 Says:
March 3rd, 2010 at 12:12 pm
Consolidation companies are good for two reasons. They will lower you interest rates and possibly your payments. Another thing to remember to to use Non-Profit Consolidated Organizations! The ones who don’t ask for money to complete the service. Investigate into all your options and choose the one that best suits your life.
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Tomel Says:
March 3rd, 2010 at 12:49 pm
My answer is a little different than those already given. If the consolidation loan rate is lower than the rates on your current debt, that’s good. If there are fees involved to get the consolidation loan, that’s bad (you need to figure out whether the lower rate on the consolidation loan more than makes up for the fees). If your current loans are unsecured (credit cards, for example) and the consolidation loan will be secured (by a lien on your home, for example), that’s very bad. If you have to pledge your home and then you don’t make payments on the loan, consilidators can be very aggressive in pursuing foreclosure.
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