Pros and cons of consolidating student debt Webcam french
Debt settlement and debt consolidation are two forms of financial help for people struggling with more debt than they can repay.
The two terms are often used interchangeably, which leads to a great deal of confusion on the part of consumers, who may not realize that these are vastly different debt relief services.
Debt consolidation is an effort to combine debts from several creditors, then take out a single loan to pay them all, hopefully at a reduced interest rate and lower monthly payment.
This is typically done by consumers trying to keep up with bills for multiple credit cards and other unsecured debts.
Credit cards are the source of most financial problems for consumers.
The average American family has 3.7 credit cards and owes ,762 in credit card debt.
Throw in bills for rent, cable, cell phone, utilities and on and on, and that’s a lot of accounting to keep up with every month.
If you fall behind on one credit card, it can be an uphill struggle to catch up.
For example, if you owed ,000, you might offer the creditor a lump-sum payment of ,000.
You make one payment to one lender with one deadline every month in place of multiple payments to multiple creditors with multiple deadlines.
Ideally, there is some cost saving involved in debt consolidation.
The downside on DMPs is that they usually take 3–5 years to eliminate the debt and some people aren’t patient enough to stick with the program that long.
Zero percent balance transfers are extremely attractive offers by credit card companies, but usually are limited to consumers with excellent credit scores.