Financial Help: Five Sources of Debt Consolidation Funds
Contributed by Deb Powers
Financial Help: Five Sources of Debt Consolidation Funds
If you need help paying all your debts, debt consolidation is a tempting option. The basic idea is to borrow one large lump sum, pay off all your existing creditors, and only owe one creditor. In addition, you may find a far lower interest rate or more equitable payment terms that allow you to reduce your total amount of debt and pay it off faster.
There are many sources of funds for debt consolidation purposes. You should shop around to find the one that's most beneficial to you, both in terms of finances and circumstances. Some of the more popular choices are listed below.
Help lower monthly payments with a consolidation plan that puts all your debt on one credit card.
There's a standing joke among my friends: Can I pay my Visa with my Master Card? The answer is - yes. And if you're careful, it may cost you less to do it that way. If you're currently making payments to several different financial institutions, each at a different annual percentage rate, it may be attractive to shift all that debt to a new credit card with a low, introductory APR. Be cautious with this - introductory rates don't always remain low, and you could end up paying far more than you expected.
A debt consolidation loan based on your home equity can help you lower your monthly debt.
Taking out a second mortgage on your home is a popular choice for getting debt consolidation funds. The benefits include lower interest rates and a longer repayment period. On the flip side, you're putting your house up as collateral for your loan. Be certain that you understand the terms, and only do business with reputable financial institutions.
