Consolidating car payments
In theory, these can serve as a way to consolidate your debt onto one card, but be careful because the fine print on these offers sometimes exposes serious drawbacks.Here’s how it’s supposed to work: you initiate the balance transfer and pay a immediate transfer fee – usually between 2% and 5% of your total balance.For example, if you were transferring ,000 to the new card you would pay 0 to 0.Then, you have a period of time (usually 6 months or 1 year) in which you will not accumulate interest on the balance.3) Confusion because of too many bills Another common obstacle to getting out of debt is when the sheer number of bills you receive makes it hard to even keep track of which payment is due on which date. While there are some real benefits to debt consolidation, it’s extremely important that you do your homework and understand there’s a wide range of options when it comes to debt consolidation loans – some are good, some are bad, and some are downright predatory.
If you decide to consolidate your credit card debt with a home equity loan (or home equity line of credit), you’re essentially betting your house on the fact that you can pay back the loan. But if you’re thinking about debt consolidation then you’ve probably already had some difficulty paying off your debts.And you will pay a monthly payment to them, which will go toward paying the principal of the loan as well as interest and fees.If you can get a low interest rate, this may be a good option.Which is why a consolidation loan can often prove to be a better option: it may allow you to get a lower interest rate, which would save you money over the long-run.2) High monthly payments People with lots of debt also frequently struggle with high minimum payments – which are sometimes more than they can pay each month.