Are Debt Consolidation Services Worth It?
If you owe a good amount of money to someone else, then you've probably considered getting help from a third-party company. And you probably grappled with the question of... Are debt consolidation services worth it? Are they really worth your time?
In today's article, we're going to highlight the main pros and cons of these types of services. By the time you're through with this quick and easy guide, you'll be in a much better position to decide whether or not this solution is suitable for you.
However, if you're ready to start searching for a company, you can check out our top rated debt firm.
Ok, let's get going...
The pros of these services:
- Lower monthly repayments. Most debt consolidation firms will do their best to ensure you get lower monthly repayments. They understand that you've been having trouble meeting your requirements. Indeed, that is why you will have contacted them in the first place. While your repayment schedule will be much longer than it otherwise would have been, that allows you to keep more of your wages in the bank week on week.
- Frozen interest. In most circumstances, it is the interest payments on the money you owe that causes the most problems. Let's presume you're making minimum payments on a couple of credit cards. You could find the bulk of your money goes simply to pay interest, and so your debt never seems to get any smaller. By using companies that specialize in debt consolidation, you could have all interest frozen. That will mean you start reducing the sum you owe for the first time in years.
- One payment. A significant amount of people fall behind with their financial commitments because things have gotten far too complicated. Paying differing amounts to multiple creditors can get confusing, and so it's easy for you to miss payments or overlook some things. Using credit card debt consolidation services will mean you only have to make one simple payment each month.
- Debt-free date. When you sign up with a service, all the terms are laid out in front of you. That means you know from the start when your debts will be repaid. That can be a weight off your mind as you will have a clear end in sight. Sure, it might be a little further into the future than you had hoped, but at least you will be more in control of your finances.
The cons of these services:
- Higher long-term cost. As we mentioned only a moment ago, using these services will mean you have to make repayments for a longer period. However, you're still in a better situation most of the time due to lower repayment amounts. Still, having to pay for longer is considered a negative point by many people.
- Fixed monthly payments. When you're paying money off credit cards, you always have the option to lower your payments to the minimum amount if you're having a bad month. You are not allowed such luxuries with most debt consolidation services. You will be expected to make the same fixed payment regardless of what might be going on elsewhere in your life.
- More borrowing. Once monthly payments have been reduced, and people have a bit more cash to play with, it can get tempting to borrow more money. If there is one piece of advice that you take away from this article, you should never try to borrow more funds when involved with a consolidation plan. The phrase "out of the frying pan..." holds meaning here.
- Secured against your home. If you are a homeowner, your debt reduction plan might involve using your home as collateral. That means you need to be very careful about making your repayments on time. Defaulting could mean you lose the roof over your head.
So are these services worth it?
Now that you've had time to read through all those points, you should have a more accurate idea of whether these services are worth your time. You should also know whether or not they are suitable for you.
We believe that the right debt consolidation service at the right time can indeed help your situation.
We also hope the information in this article has gone part of the way
to helping you make the right decision.
At the end of the day, you are the only one who truly understands your financial situation. This article just gives you a helping hand.
You can turn your finances around, and you can do it a lot faster than you think. Getting started is always the hardest part.
- Reviews of the top consolidation companies
- Best way to consolidate your debt
- The 3 main types of debt consolidation loans