3 Debt Consolidation Program Mistakes to Avoid

By Max Webber
In November 30, 2010

Are you thinking about entering a debt consolidation program?  It can be a great solution, yet you will want to be mindful in helping yourself.  For instance, sometimes advertisers and marketing material is engineered in order to make those most vulnerable, lean towards a debt consolidation program.  A debt consolidation program is a great solution to those who find themselves in an unwanted financial situation, but it is necessary to think about the program and how it will change your current situation before entering an agreement.  Read about the following debt consolidation program mistakes you want to avoid.

A debt consolidation program can immediately get you out of an unwanted situation, yet may place you into a different one, which you may not realize until a later time.  For instance, many people get into tough situations due to credit rates that suddenly rise because of a pre-determined interest rate that has ended or a violation such as a late payment has occurred.  People become frantic due to the exorbitant rates that are now due monthly and scramble to do anything to escape the monthly dues.  People may fall prey to a debt consolidation program that will promise to settle their current debt and replace it with affordable monthly payments.  What the same people may not realize is that though the monthly payments are lower, the creditors are not being paid each month, collection efforts will increase and their credit score will suffer greatly.

Some debt consolidation program advertisers use scare tactics in order to lure people into their programs.  They may often play with numbers that project your debt not getting erased for years to come; that may be true if you are paying high interest rates and only paying the minimum payment each month.  Don’t rely on others to do your mathematics.  You may find that you can pay off debt easier by committing to paying well over what is due each month.  You may have to modify your regular spending habits, yet you won’t have to pay high interest rates to get out of an immediate bind.

Many people take an aversive approach to debt consolidation programs and do everything in their power to avoid them.  Debt consolidation programs can be a very good solution to your financial problems, yet it is important to read all the fine print and understand if you are going to pay more in the long run.  It may be much worse to seek alternatives such as leveraging a balance transfer to another card; taking out a second mortgage on your home; or refinancing your car.  Debt consolidation programs exist to help those who perform the due diligence to help themselves.