Pros and cons of consolidating bills
If you can currently afford to make all your required monthly payments and have equity in your home, then look to consolidate debts with a cash-out loan or refinance.If you can afford to make a minimum monthly payment that is about 2.5% of the total of your debts, then look to credit counseling.
On the other hand, you can consolidate your bills to streamline your finances and save time.A report issued earlier this year by the US government was that the average credit card debt per household in the United States is $15,607. In either event, you would use the money to pay off all of your other debts.US households also have an average of $32,656 in student loan debt and an average of $153,500 in mortgage debt. If your debts have spun out of control and you’re looking for some relief, there is a simple solution. This would leave you with just one monthly payment to make each month, which should be much less than the sum of the payments you’re currently making.No matter want choice you make when deciding how to consolidate debt, let point you in the right direction with advice and debt consolidation providers that have been pre-screened to help you consolidate debt.Whether we like to admit it or not we have become a nation of debt junkies.The third option is to get a debt consolidation loan from your bank or credit union.
There are two types of debt consolidation loans – secured and unsecured.
The debt settlement industry is now required to follow a set of new rules issued by the Federal Trade Commission that went into effect in October, 2010. For instance, anyone now enrolling in a debt settlement program is not required to pay a service fee to the settlement firm until his or her account has been settled.
This makes settlement an even more attractive option for the consumer.
If you have a 401(k) and borrow from it you will have to pay interest on the money but you will be paying interest to yourself.
One note of caution about this – which is that if you don’t pay all the money back within six months, it will be treated as ordinary income and taxed accordingly.
While a variable rate loan can look very enticing because of its low interest rate, there is a risk with this type of loan.