The dangers of debt consolidation

You may have noticed that interest rates currently are extremely low, but be careful as you just because the interest rates are as low as they have been you should still proceed with caution when trying to consolidate all your higher interest rates debt into one lower one. What looks like a cure for all your debt woes, usually ends up as just a symptomatic relief cure and more often than not you're back where you've started.

There are several approaches people may take to combat their debt and loans, one is to seek debt consolidation loans as previous posts have looked at. Another may be zero balance transfers on credit cards, and others include home equity loans and lines of credit. However, research has shown in America that people who took out home equity loans to pay off credit card debts have ended up with the same, or in some cases a higher, debt loan than when they started off.

The trouble is with seeking debt consolidation, it basically reinforces why you got in trouble to start with as it relies on the same borrowing tendencies that you got into debt with. Effectively adding more fuel to the fire. Plus if you're looking to take advantage of the low interest rates currently offered, with a bad credit score it's more than likely that these interest rates will not be offered to you but higher ones as you're considered too much of a credit risk.

However, if all options have been explored and credit debt consolidation is your option we recommend you do your research thoroughly on the company before comitting to anything. If you're going to take out a home loan you should always read the contract and understand the risks involved - that you could lose your home if you default on repayments. Where possible seek an IVA. Also if you are not a homeowner, and seek a zero percent credit card option, make sure you know how long this interest period lasts for and when the rate jumps back up.