If you’ve accumulated a large amount on your multiple credit cards and have chosen to consolidate your debts, then you need to be extra careful. There are a number of debt consolidation companies appearing at every corner of the street, claiming as a good service provider. It’s not that all such companies are scams, but you should in the long run.
Below are some most common consolidation mistakes you should avoid while combining your debts to become debt free.
You in a balance transfer method. If you just transfer the balances of few cards with a high interest rate into another card with a low interest rate, while leaving out some other cards, then you will face a lot of complications. You’ll have to pay for the consolidated cards, or else, you also have to go on paying for the ones which you haven’t.
Before applying for a credit consolidation loan, you need to check your credit reports properly. . Hence, you should check your credit report thoroughly and contact the credit reporting agencies immediately in case of any discrepancies.
Don’t just rely on any credit consolidation company that comes your way. You should before approaching it, in order to avoid scams companies. Also, you should check a few companies and what kind of terms they are offering before signing.
Make sure you do a comprehensive market research to grab the best loans in the market. You need to , or else it’ll become quite impossible for you to know which rates will suit your financial affordability and which rates will offer you the most benefit.
Try not to close down all your accounts with zero balance after transferring all your balances in one account. If you close down all the accounts together except one, then your credit limit may lower drastically and it’ll affect your credit score negatively.
Make sure you . Know the pros and cons of each option so that you don’t face any trouble after you’ve already made the decision.
Many options like, debt consolidation loans, home equity loans, balance transfer cards are there to consolidate your debts. But before considering any particular decision, you must so that you don’t end up spending more money.
Along with avoiding the above mistakes, you should . You should plan a budget and save considerable amount of money each month in order to pay the monthly bills on time. Remember, even a small mistake can cost you dearly in the long run and this may ruin your personal finances as well. So, be very careful while considering consolidation as your debt pay off option.