Debt consolidation sounds like a great way to pay off credit cards and other debt, doesn't it? You can combine all your payments into a single one, that most likely has a lot lower interest than the others do.
What can be wrong with that?
Several things, actually. Let's look at some of the most important reasons consolidating your credit cards may not be a good idea.
You can wind up paying more in the long run.
Most debt consolidation loans require you to consolidate all your unsecured debt. That means that other loans could be lumped into the consolidation, not just your credit cards.
And those loans could have lower interest rates than the consolidation loan. Or they might be getting close to the end of their term and adding them into the consolidation loan could wind up extending them by several more years.
These situations could offset the savings you get on the credit card debt, and even wind up costing you more over time.
You could end up putting your home at risk.
Many debt and credit card consolidation loans are tied to the equity in your home. This means that they're secured by your home.
If you lose your job or something else happens that leaves you unable to make the payments on your consolidation loan, you could end up losing your home to foreclosure.
With unsecured debt, such as that on credit cards, this won't happen. Is the risk worth the savings you'll get through the consolidation loan? Only you can make that decision.
How would you like to come up with some extra cash to help pay off your credit card bills this month? Visit the Debt Reduction Academy website, where you can sign up to receive your free 5 day mini course "Operation Money-Find: How To Find Money To Start Paying Off Your Debt This Month". Grab your copy now at http://www.debtreductionacademy.com
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