subject: Is it Wise to Consolidate Credit Card Debt? [print this page] When multiple credit card debts become overwhelming, a debt consolidation loan appears to provide the solution. All your outstanding balances of your cards are combined into one single loan. It seems to be simple and easy to afford, however, this may not be necessarily the case. Many people have wrong perception on this typical loan. They assume that by taking out another loan will definitely bring instant debt elimination. They develop a false sense of relief. The actual fact is even they have obtained the loan, they are still in debt. Their credit card debt doesn't disappear. They in fact borrow additional money. Hence, they still have financial obligations to pay off their new loan. In general, when the debtors consolidate their debts, the cards are left active. They can swipe the cards easily as they see zero balance on their card statements. This has encouraged them to keep spending. Sooner or later, they are trapped in deep credit card debt AGAIN! Under the debt consolidation concept, the debtors are allowed to make lower monthly repayment and they can extend the lifespan of their loan. It is in fact not good news for the debtors. For people who are refinancing their debt over a much greater period, they are actually paying more interest in the long run. This doesn't benefit them at all. When you consolidate your debts, you are turning unsecured debt into a secured one. You are required to provide your creditor with collateral. By doing so, you are actually placing your property at risk if you can't afford to make repayments. In short, if the total amount of credit card debt is not big, never ever consolidate the debts. It will make your financial situation worse. If you are looking forward for a bright financial future, think twice before consolidating your debts. It could be a great danger for you. Hence, you are advised to create your own stimulus package to raise more fund to overcome your debt problems.
