{"id":135,"date":"2021-04-26T23:17:22","date_gmt":"2021-04-26T23:17:22","guid":{"rendered":"https:\/\/premadeniche.com\/DebtFreeWebsite\/?p=135"},"modified":"2021-04-26T23:17:22","modified_gmt":"2021-04-26T23:17:22","slug":"debt-consolidation-programs","status":"publish","type":"post","link":"https:\/\/premadeniche.com\/DebtFreeWebsite\/debt-consolidation-programs\/","title":{"rendered":"Debt Consolidation Programs"},"content":{"rendered":"

During hard financial times, people all over the world are worried on how to make ends of income and expenses meet. As a form of solution, there are debt consolidation programs<\/strong> that are necessary for those who want to take care of their bills.<\/p>\n

If all is well and good, debt consolidation programs are designed to take your previous loans or any other forms of debts which have higher interests into one plan<\/em>. This plan will have lower interest rates.<\/p>\n

Also, the effort that you need to put into the process of management of the account and paying your regular bills will only include this single chore.Be careful when you want to use the services of these companies<\/strong>. Although there are those which can help you a lot, there can also be those which might only cost you more. They will only add to your debts and increase your worries. Those who promise that you will have all the solution that you need can still give you problems in the long run.<\/p>\n

The solution that you might get can only be in the form of temporary<\/p>\n

\u201cYou\u2019re getting symptomatic relief, not a credit cure,\u201d says Chris Viale, general manager of Cambridge Credit Corp., a nonprofit credit counseling agency based in Agawam, Mass.<\/p>\n

This fighting-fire-with-fire approach can take several forms. There are debt-consolidation loans, balance transfers to a zero-percent credit card and home equity loans or lines of credit.<\/em><\/p>\n

But, says Viale, 70 percent of Americans who take out a home equity loan or other type of loan to pay off credit cards end up with the same (if not higher) debt load within two years.<\/p>\n

Viale\u2019s statistics<\/strong> underscore a major problem with debt consolidation: It feeds upon the tendencies that got you in trouble in the first place. By taking on yet another creditor, you\u2019re adding the proverbial fuel to the fire. In this case, it\u2019s your money that\u2019s burning.
\nPlus, if you\u2019ve taken on so much debt that you\u2019re looking for more as a solution, chances are you won\u2019t qualify for the very low interest rates you see advertised. Those generally go to people with stellar credit ratings.<\/p>\n

However, if you\u2019re at the end of your credit rope or swear that this time you\u2019ll be more disciplined, debt consolidation may be something to consider despite its risks<\/em>. Here are some popular forms of debt consolidation, how they work and a look at their pros and cons.<\/p>\n

Home equity loan or line of credit<\/strong><\/p>\n

Home equity lines or loans<\/em> often are touted as a quick and easy way to get out of debt. By leveraging your residence\u2019s value, the pitch goes, you can get money to pay off other bills and a tax break, too.<\/p>\n

But borrowing against your house can backfire. The biggest risk: You could lose your home if you default on the loan.<\/p>\n

\u201cSome hardship occurs and now they have double the debt and if it\u2019s secured by their home, they could lose it,\u201d says Diane Giarratano, director of education at Garden State Consumer Credit Counseling in Freehold, N.J.<\/p>\n

And while equity loan interest generally is tax deductible, it could be limited in some situations. Even when it does provide a tax break, Cambridge\u2019s Viale says \u201cthat doesn\u2019t mean it makes fiscal sense.\u201d<\/p>\n

Giarratano agrees. \u201cBanks will tell you how much you can borrow,\u201d she says. \u201cThat doesn\u2019t mean you should borrow the total amount, but that\u2019s what people do.\u201d<\/p>\n

Still, a home equity line of credit or loan to pay off creditors can work for some debt-burdened homeowners. Just be sure to do your homework to guarantee that the home equity dollars and cents make sense. This Bankrate calculator can help your determine whether borrowing against your home\u2019s equity is a wise move.<\/p>\n

Zero-percent credit card<\/strong>
\nWhat about people who don\u2019t own a house? In these cases, many turn to zero-percent credit cards to reduce debt. Again, prudence and discipline are required.<\/p>\n

Companies offer these rates as teasers \u2014 enticements for you to switch credit card vendors. Much of the time, card companies target consumers with better credit, so that may leave someone struggling with debt without this option.<\/p>\n

Even if you do qualify for a zero-percent or similar single-digit rate, it won\u2019t last forever. Make sure you know when it will end and what the rate is expected to jump to when it does.<\/p>\n

The low rate<\/em> also lasts only if you pay on time. One late payment and the credit card company will jack up the rate. Also look for hidden fees and charges that can increase the actual cost of credit.<\/p>\n

\u201cIt\u2019s a short-term fix,\u201d<\/em> says Viale. \u201cThe only way it works is if you are really meticulous about paying it and stay on top of it and then move onto another credit card before the low interest rate expires.\u201d<\/p>\n

Opening new credit card accounts every six months, however, could negatively affect your credit rating, he cautions.<\/p>\n

And to successfully lower your debt load, you\u2019ll need to pay far more than the smallest amount the card company will accept, especially after that zero rate disappears. \u201cPaying the minimum for a $20,000 debt won\u2019t cut it,\u201d notes Viale.<\/p>\n

Bankrate\u2019s minimum payment calculator illustrates Viale\u2019s assessment. Say, for example, you transferred $20,000 of other debt to a zero-percent card and paid $1,000 on it by the time the rate jumped to 14 percent. If you make only the minimum monthly payments, it will take you 1,134 months \u2014 or 94.5 years \u2014 to erase your remaining $19,000 balance. If you live that long, you\u2019ll pay $64,805 in interest. And that\u2019s presuming you don\u2019t charge another thing during that time.<\/p>\n","protected":false},"excerpt":{"rendered":"

During hard financial times, people all over the world are worried on how to make ends of income and expenses meet. As a form of solution, there are debt consolidation programs that are necessary for those who want to take care of their bills. If all is well and good, debt consolidation programs are designed to take your previous loans or any other forms of debts which have higher interests into one plan. This plan will have lower interest rates. Also, the effort that you need to […]<\/p>\n","protected":false},"author":1,"featured_media":136,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt-consolidation"],"_links":{"self":[{"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/posts\/135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/comments?post=135"}],"version-history":[{"count":1,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/posts\/135\/revisions"}],"predecessor-version":[{"id":137,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/posts\/135\/revisions\/137"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/media\/136"}],"wp:attachment":[{"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/media?parent=135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/categories?post=135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/premadeniche.com\/DebtFreeWebsite\/wp-json\/wp\/v2\/tags?post=135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}