The 4 Questions To Ask Creditors When Consolidating Your Debt
Why Use a Debt Consolidation Service?
In times of financial hardship, many people begin to search for ways to improve their financial stability. They know that something must be done to get their finances under control, but they may not be sure what options are the best.
Debt consolidation services often come up in Internet searches when people are searching for help with their debt. Sadly, many people overlook this option because they are either not sure what this type of service provides or if it is the right choice for them. This type of service, however, is often exactly what they need.
Understanding Debt Consolidation
Debt consolidation is a very basic and helpful tool to managing your finances. It consists of working with a debt counselor to combine all of your unsecured debts, such as credit cards and unsecured loans, into one simple monthly payment. Other debts that are not secured, such as medical bills and old debt collection bills, can also be included in a debt consolidation program.
As an additional benefit, the credit counselors can often reduce interest rates, have late payment and over limit fees removed or reduced as part of the repayment plan. This significantly reduces your debt burden and allows you to pay off these debts at a much faster rate.
One of the best things about debt consolidation is the reduction in interest rates. When you consolidate your debt, you will most likely cut your interest rates by half or more. Interest rates often plays the largest part of debt problems.
Your average credit card has its interest rate set at a level that makes it nearly impossible to pay off the debt for decades. In fact, a credit card with a $5,000 limit that is charged to the limit will take almost 27 years to pay off at the minimum monthly payment. That is almost as long as an average mortgage!
By reducing interest rates and removing excessive fees, you can make your debt manageable and have it quickly paid off. Debt consolidation programs last between 18 months and five years depending on your ability to pay and the amount of your total debt. Even five years is more acceptable than 27 years of payments.
Once you have entered into and completed a debt consolidation program you will regain control over your finances. You will be able to easily manage the monthly payment, and you will find yourself debt free in a very short period of time.
You can than dedicate yourself to creating a secure financial future for yourself. All the money that you will be saving each month will allow you to save for a home, a car, a vacation or your retirement.