subject: Ten Common mistakes of debt consolidation [print this page] Ten Common mistakes of debt consolidation
If you are planning to pay off your debts by debt consolidation, you need to pay attention to some common errors that people will often make when they consolidate debt. Here's a list of most common mistakes of debt consolidation.
1. Paying off cards but continuing to use them. This only makes it easy for you to charge your cards to the max again.
2. Paying close attention to fees for balance transfers. There may be monthly charges, annual fees or fees for transferring your balances. All these fees can make it more expensive than staying where you are.
3. Going with a company just for its label. Just because they say they are not-for-profit or a Christian debt consolidation company does not make them any more reputable or realistic than other companies. Shop around and determine the right company for you and your needs.
4. Agreeing to a plan that you can not realistically keep up with. Your financial situation may be making you crazy and stressed but you should never agree to a payment you are uncomfortable with just for the sake of getting it off your plate. Spend some time weighing the pros and cons prior to making a final decision.
5. Making late payments during low introductory periods. Making even one late payment during this time can make your rates increase.
6. Obtaining debt help with high fees due up-front. All reputable companies will charge a fee but it should be a low up-front cost or not require one at all. High up-front costs should be a red flag!
7. Taking out a high interest rate loan. This is not a good idea if the interest is higher than the one you are already paying. You will pay too much money in the long run.
8. Mistaking low payments with low interest during the loan process. Even though the loan repayment amount may be lower than you where previously paying your interest could still be very high. They may have extended your loan repayment time.
9. Getting a personal loan with high interest. This is great if you have good credit but the rates can be high. Shop around before making a selection.
10. Opt to leave out the low interest rate payments. You do not have to include all of your debt in the debt consolidation. You should opt to pay off the lower interest rate cards yourself. This may not be very convenient for you now but it will be over time.
