The Truth About Debt Consolidation: An Unbiased Review

The Truth About Debt Consolidation: An Unbiased Review
You might be tired of seeing the balance on your credit card rise per month. Not only the balance, but the interest rates are giving you significant headaches as well.
There is anxiety, and you are always worried about your debt. You have come across various online posts, and blog articles about debt consolidation help you get rid of the stress as well as the debt. Yes, we understand you are actively considering it. 
Yes, debt consolidation can help you turn your financial game around and breathe the breath of life in your debt ridden crisis world. There are many takers for the consolidation option, and with the increase in the number of individuals fighting a losing battle with debt these days, the trend will undoubtedly keep growing in the near future. 
This is where it becomes essential to understand debt consolidation thoroughly to know what parts of the consolidation option work and what doesn't. For all detailed information log in to NationaldebtRelief.com and research all about the pros and cons of debt consolidation.

About debt consolidation

Quite simply put, debt consolidation is a unique financial and debt management plan. If you are looking to simplify bill paying, then, by all means, go for it. With an affordable goal for every month, should you find one, you can eventually rid yourself of the debt you had to plow through all these years.

Research, comparative analysis, and careful planning are all you need to make debt consolidation work. But keep in mind that it will take time, and you will need to practice a few essential good habits to break even eventually. 
In simple words, debt consolidation is all about, making a single affordable payment per month to one single source.

Debt consolidation is not the best option if,

If you are not going to change your spending habits, then debt consolidation will never work for you. Using the credit card for every purchase will hamper the debt consolidation plan and work against you. You will never get rid of the vicious cycle of incurring debt and the catching up to it. 

Here is what to do

The very first step that you need to ensure is to put away the credit card, for good. In the real world, it is not feasible to own a credit card and never use it. But, according to the debt management experts, you need to stop using the credit card until you reach a specific goal of clearing a substantial amount of the credit owed. 

Make a monthly budget and stick to it

Be aware of the contractual fine prints while taking out a loan or a line of credit for clearing past dues
Calculate the fees and the costs for debt consolidation and compare the same with the amount you need to pay the debt generally. If it is helping you to save, then go for it. But, if it costs you more, debt consolidation is not for you.
Always make sure to make the monthly payment to the debt management program. Keep the payments constant and like clockwork to retain the customer privileges you get bestowed with.

When does debt consolidation work?

Let us assume for a moment that you are knee-deep in debt from credit cards, student, house, or automobile loans. You keep on going for the minimum monthly payments, but it is to no avail since it will hardly make a dent in the net debt you are under. If you are considering a change in the debt landscape considerably, then you need to go for a consolidation option. However, you need to make sure that the consolidation loan is a single easy payment one with lower interest rates. 

Is debt consolidation fool-proof?

In the earlier sections, we talked about where debt consolidation comes in handy. However, we had promised you an unbiased review of debt consolidation and true to our promise here are some of the untold truths about debt consolidation. In case you have incurred a debt that amounts to a massive figure, then no loan or debt settlement company will help you slay the beast. You might end up paying more and stay in debt forever. If you do not find the right balance of consolidation loan plan interest and your monthly salary, that is a possibility.   
Keep the following in mind when going for debt consolidation
• Consolidation is primarily refinancing a loan which has an extended repayment term.
• Since the plan is of an extended repayment, you will stay under the burden of debt longer.
• There is no guarantee of the lower interest rate when consolidating. 
• The program is debt consolidation and not debt elimination. 
Let us have a look at these lesser-known facts in detail.

There is no guarantee of the lower interest rates

When you are refinancing a loan or a debt, keep in mind that the lender/creditor will set the loan interest rate. This is where things get tricky, as the creditor will use your credit score to judge the merit of your application concerning your liability risk or quality investment. There is no guarantee for the low-interest rates as promised. 

The interest rates are subject to changes

Even if you manage to get a low-interest rate loan for refinancing purposes, the interest rates are subject to changes. This is usually the case with credit card balance transfers, and the low/zero interest rate is only applicable for only a certain time duration. 

You are staying in debt longer

With debt consolidation, in 90% of the cases, the payments per month are lower since the loan term is stretched to the max. This makes sure that your payments are affordable, but on the flip side, you are just getting rid of the debt for the consolidated dues while building a new one. 
It all comes down to your behaviour with money, your motivation to curb your spending and exercising self-caution. Pay in cash and keep the plastic money in your wallet is a great idea when it comes to saving money and managing debt. Change your behaviour, and you might break through the debt trap without any external help. If you still want to control the payment of unpaid dues and bills better and efficiently, carefully consider the facts before going for debt consolidation.
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