The Drastic Downside To Debt Consolidation

What could possibly be the downside to consolidating your debt? Isn’t debt consolidation a flawless solution to your debt problem? Well, yes, debt consolidation can give you a big advantage over your debt situation, but keep in mind, that its not removing the debt, it’s actually making it more manageable for you.

Take for instance; if you have several credit cards with various high interest rates, it would be a lot better to owe one lump sum with hopefully one low interest rate. Not to mention the fact, that you would only have one payment date to keep track of instead of several dates. And trying to make those payment deadlines when your paying on several credit card accounts can be pure hell at times. They really stick it to you with those late payment fees.

So yes, it’s much nicer to deal with just one debt payment then it is to deal with several payments. Again, that is a management aspect of debt; consolidating your debt does absolutely nothing to shrink your debt. The debt amount stays the same; the only difference is that it’s under one umbrella so to speak. Which means, that those several other credit cards are at a zero balance. O’boy! Therein lies the potential problem. Those original credit card accounts that carried a high interest balance are free to be used again.

I hate to say it, but many people fall prey to using those same credit cards that they just paid off with a debt consolidation loan and end up in deeper debt. That is the drastic downside of using debt consolidation. If you don’t have the discipline to get on a regimented debt repayment program, and are not able to stay within a spending budget, you could very well end up in a worse debt situation. That is definitely something to keep in mind if you’re considering consolidating your debt.