Consumer debt consolidation is the practice of taking out a loan, either a secured or unsecured loan, to pay down or payoff another loan or loans. This is a common practice in regards to consolidating credit card debt. Because many credit card accounts carry higher interest rates then normal bank loans, many individuals are motivated to take out a secured loan at a better interest rate and payoff the balance on their credit card accounts. This is beneficial to the consumer because they end up paying less money in interest over the life of the loan, compared to the amount of interest they would have paid, paying off their credit card accounts.
Also, it’s much easier to keep track of one payment compared to several payments, and usually, the consolidation loan payment is lower than the combined total of the previous credit card account payments. That fact in itself is the main reason why people choose to consolidate their debt. Debt consolidation is helpful in making consumer debt more manageable. Lets say you have six credit cards and the combined monthly payment for those cards is $251.00. You take out a consolidation loan for the balance on those accounts, and you end up with one payment of $100.00. Wouldn’t that help give you a little financial breathing room? Yes, of course. Well, that’s the beauty of consumer debt consolidation. Again, it has the ability to make your overall debt situation more manageable. In other words, it makes it easier to deal with.
But, lets be real; it does not take the debt away. You still owe on borrowed money whether it’s a consolidation loan or credit card loan. And just because I mentioned it, you do know that using a credit card is the same as borrowing money from someone, right? I get the impression – myself included – that most people don’t make that connection. I think that’s due to some incredible marketing and advertising on behalf of the credit card companies themselves.
Consumer debt consolidation can be a very beneficial option for managing debt, just keep in mind that it does not remove the debt.
What Is Consumer Debt Consolidation?
Posted by DL | 1:44 PM | borrowed money, Consumer debt consolidation, credit cards, Debt Consolidation | 2 comments »
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Your blog is quite informative - but the advice is somewhat standard. I'm curious to know what your opinion is of the following blog:
http://www.thetruthaboutdebtrelief.blogspot.com/
It's written by Doug Johnson who has some very interesting strategies, it seems. I'm wondering if they are legal?
Regards,
Kevin
Hello Kevin, thanks for the visit. Sorry it has taken me so long to moderate your comment and get back to you. I’ve been incredibly busy with a few other projects and have been meaning to review the blog you mentioned, but I haven’t been able to make the time. I wanted to review it before I responded to your comment. If I get a chance in the near future, I will let you know what I think.
In regards to your comment, "Your blog is quite informative - but the advice is somewhat standard." Yes, I would have to agree for the most part that the information I provide here is somewhat basic. And that is mainly due to the fact that there are plenty of people out there considering debt consolidation who need just the basics on the subject.
My goal is to give them the basic facts. I am purposely trying to keep things simple. I also acknowledge that there are other potential options that can be exercised to achieve relief from debt; but the focus of this blog is on debt consolidation. I am in the process of developing a new website that will focus more directly on other viable options for debt relief.
Again, thank you for your comment and I welcome your response.