Lumping your debts together

Debt consolidation can be a good option for those who can handle their repayments responsibly, if not, it could lead you into even more debt. The process is basically taking a loan out to cover all your debt. This allows you to pay back just the one large loan rather than multiple smaller loans. The upside is that the interest and installments will be less and it will be possible to repay debt before the period is up- if you can manage your finances correctly.

If you are considering debt consolidation as the right option for you, first check your situation against these criteria:

• Interest rates on the new debt must be lower than the collective rate of your debt, otherwise this will be a fruitless move to make
• The total amount of money owed to debts must get lower each month, otherwise you are probably just covering interest.
• Don’t move from fixed-rate debt to variable-rate debt, while it may start out lower, variable-rate debt is a higher risk and could end up being a lot higher than the fixed-rate.
• Commit to the debt and don’t take on any more. Avoiding more debt is key at this stage, rather focus on clearing your consolidated debt before seeking more. Many see consolidation as the chance to take out more credit, but this often leads to more trouble.

National Debt Advisors have a set of solutions to suit your individual needs, finding the best route for you to get passed your debt.