Consolidating your debt

Debt consolidation is the bundling of many loans into one loan. This is done in order to get a lower interest rate, to get a fixed interest rate, to get a smaller monthly payment or merely for the convenience of just having one loan. Since each person’s financial situation is unique, there is no hard and fast rule about the best way to consolidate debt or even if debt consolidation is a good idea.
However, there are several rules that apply to everyone that should be considered before doing any debt consolidation. Do the math. If you have $10,000 of debt on three credit cards at 25% interest it is a good idea if you can transfer that debt to one credit card at 18% interest. However, check to see if there are fees attached to this balance transfer or if the new credit card has a large annual fee. You should verify that you are actually saving money in this case. If the new interest rate is for a short time then you should verify that you will still be saving money when the interest rate goes back up. Read the fine print.
Paying off credit card debt by […]

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