Most people today that have any kind of credit history will receive debt consolidation offers either in the mail or over email. While some of them are legitimate there are a host of them that can cause more harm then good.
One of the biggest misconceptions about a debt consolidation loan is that they are simple to acquire. Those people that really need one are already in financial hardship from missing a few payments. Those same people may be lured in with a loan that indeed lowers their monthly payment but pays for it in the long term with even higher interest rates. These rates can soar as high as 29% in some cases.
Another one to look out for is balance transfers. These are fairly common and while they can be used in an advantageous way more often times they are not. The problems lies in that they usually only last a few months. Before you know it you are transferring your balance to a new card and all this activity shows up on your credit report which is not good. Eventually you will be looking for another card and get turned down for any new offers while getting stuck with a high interest card.
The last thing to be wary of are companies that promise to eliminate all of your debt and take care of everything. These companies prey on people that are desperate to turn their lives around. They often time charge high fees to bargain with your creditors. This is something that you could be doing for yourself for free.
Keep these things in mind if you are ever in a situation where you require debt consolidation and you will not make your situation worse then it already is.
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