Debt Consolidation - the right option?
Consolidating all of your debts into one single loan or Debt Consolidation Loan, is the biggest reason to take out a loan in the UK. The loans can take many forms including personal loans, credit card transfer, and re-mortgaging.
The hope for most people looking to consolidate their debts is that by lumping everything together, debts become more manageable and repayments can be made more affordable as the new loan is often spread over a longer period.
What’s important when considering Debt Consolidation or any other debt solution is that you budget correctly and you can afford the repayments. If you can afford the repayments it is then essential that you don’t get tempted to use the credit facilities that you may have cleared, especially credit cards.
TIP: If you do consolidate your credit card debt, cut up your old credit cards before you get tempted to use them again.
Another factor to consider when deciding whether Debt Consolidation is the right solution for you is the interest rate. If you are consolidating your debts because of poor money management and maybe even missed repayments, you may have to pay a relatively high interest rate, making this an expensive option in the long term.
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