Consolidating debt hurt credit
You consult a company that promises to lower your payment to 0 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay 0 less per month in payments?But here’s the downside: It will now take you 58 months to pay off the loan.You’re in deep with credit cards, student loan payments and car loans.Minimum monthly payments aren’t doing the trick to help nix your debt, and you’re flippin’ scared.Once their fee is accounted for, they promise to negotiate with your creditors and settle your debts. Well, the debt settlement companies usually don’t deliver on helping you with your debt after they take your money.
In other words, they haven’t established good money habits for staying out of debt and building wealth.
But let’s be honest: Your interest rate isn’t the main problem. This specifically applies to consolidating debt through credit card balance transfers.
The enticingly low interest rate is usually an introductory promotion and applies for a certain period of time only. Be on guard for “special” low-interest deals before or after the holidays.
Debt settlement companies also charge a fee for their "service." Often, the fee is anywhere from 15–20% of your debt.
Think about it this way: If you owe ,000, your settlement fees would range from ,500–10,000.