Debt Consolidating To Save Money

Out of all the techniques to make your money go further I think one that seems to be getting the most attention is debt consolidating to save money, but is it the best way to go about it and if so, how does it work?

Debt Consolidating to save money is a simple concept; you find a company that will help you combine some of your credit card debt into one bigger loan. That way you only have one payment and the interest rate is lower. Or, even if it’s not a lower interest rate, you are only paying the interest on one loan instead of several smaller credit cards or debts.

It’s a good idea in theory, most of us would have an easier time paying one payment every month than two, three, four or even more. But, you do have to be aware that there can be some pitfalls too.

In this article I will go over some of the things you need to be aware of so this technique actually helps your financial situation and doesn’t make it worse:

1. As with all types of financial arrangements make sure you carefully read all the fine print of any contract you are signing. Never, ever just sign based on what you were told. Make sure that the actual written contract spells out exactly what was discussed and promised to you.

If you aren’t sure of something ask for a clarification and if the contract is overly long and complicated don’t hesitate to run it by an attorney first. I know this may sound like overkill but you don’t want to make things worse by signing a contract with a company who isn’t honest and ethical.

In particular make sure that all the specifics are spelled out such as the interest rate, when you will be making payments, where you will make payments, what happens if a payment is late, how long of a term the loan is for, etc.

2. Always check with the Better Business Bureau to see if any complaints have been filed with the company you are considering for your loan consolidation. This is a valuable resource that many people overlook.

Online testimonials and referrals from friends are great too, but checking with the BBB can give you an even broader idea of how well the company has been doing and how honest they are in their dealings with their customers.

Overall you just want to make sure that you know exactly what, if any, impact that this consolidation will have on your financial picture. In particular what impact will this consolidation have on your overall credit rating?

Even if your credit score is impacted it still might be a smaller impact than you would have if you don’t get your finances under control now.

It is a balancing act that you need to carefully consider before you make this decision.

Debt consolidating to save money is a great option for many people and it may be the best course of action for you and your situation too. Just find out what is involved and then use that information to make the best decision you can.