Personal debt consolidation loans and opportunities to consolidate debt through the use of balance transfer credit cards are two of the options that consumers have used as a way to make their debt obligation repayments more affordable, as consolidating these debts can offer lower payments each month and, in some cases, has benefited consumers who have consolidated various high interest debts. However, the issue of debt consolidation through the use of either loans or balance transfer cards has been debated, despite the fact that consumers who may be in a difficult financial position typically use some form of debt relief assistance, which can come through a consolidation plan.
Benefits from consolidating are, again, usually in the form of more affordable payments each month as a debt consolidation loan, for example, will only require that one interest rate be combated by the borrower, and understandably, this can be more affordable to consumers who may have multiple outstanding debts. Consolidation loans can be used for a variety of personal debt obligations sources, like car loans, student loans, or even credit cards, but lately there has been a rise in offers for balance transfer credit cards that can provide little or no interest to consumers who consolidate using this method.
Consumers in need of debt relief though often are prompted by counselors to look at their situation to be sure that consolidating will be helpful for their debt position, as there are some drawbacks to either acquiring a personal loan or credit card to consolidate debt. Again, financial advisers do differ on this topic, as some feel consolidating can be helpful, while there are those who are adamantly against using a debt consolidation loan, but consumers must look at their personal situation before deciding whether these options are in their best interest.
As for offers that are currently being seen from credit cards, consumers who may be able to benefit from a balance transfer credit card which will allow for these individuals to consolidate debt, there may be strings attached despite the fact that cardholders may get an introductory rate as low as 0%. Obviously, many balance transfer cards will charge fees, which must be factored into the equation for any consumer looking to consolidate debt on one of these credit cards, and the interest rate which typically draws new cardholders in is for a specific period of time, so consumers must look at what their rate will be after this period expires.
Some problems which have arisen for individuals in the past when using balance transfer credit cards usually comes in the form of being unable to pay off the balance transfer total on their card, which could leave them paying on debt at a higher interest rate in some cases. Consumers who choose to consolidate debt on a balance transfer card with little or no interest can, essentially, erases debts with no added fees outside of the payment which must be met when transferring balances to this card, but there are still some consumers who may not be able to erase the total amount they have transferred onto a new card and could see their overall costs rise when they must start combating interest.
Essentially, debt consolidation loans do have the same fault as, in some cases, they will take longer to repay and despite having a lower interest rate could cost more when all is said and done thanks to the higher principal amount associated with this consolidation loan. For consumers who feel that consolidating is their best bet to find affordability and avoid missed payments, looking at the repayment time frame that must be met, the ability to pay the minimal requirement, if not more, on a consolidation loan or balance transfer, and the overall costs that will be met when interest is factored in are all considerations that must be made by the consumer before entering into any sort of debt consolidation agreement, no matter how tempting the offer may sound.