The Pros and Cons of Debt Consolidation Loans

You are swimming in debt. You have 4 credit cards maxed out, a car loan, a consumer loan, and a house payment. Simply making the minimum payments is causing your distress and certainly not getting you out of debt. What should you do?

Some people feel that debt consolidation loans are the best option. A debt consolidation loans is one loan which pays off many other loans or lines of credit.

I'm sure you've seen the advertisements of smiling people who have chosen to take a consolidation loan. They seem to have had the weight of the world lifted off their shoulders. But are debt consolidation loans a good deal? Let's explore the pros and cons of this type of debt solution.

Pros

1. One payment versus many payments: The average citizen of the USA pays 11 different creditors every month. Making one single payment is much easier than figuring out who should get paid how much and when. This makes managing your finances much easier.

2. Reduced interest rates: Since the most common type of debt consolidation loan is the home equity loan, also called a second mortgage, the interest rates will be lower than most consumer debt interest rates. Your mortgage is a secured debt. This means that they have something they can take from you if you do not make your payment. Credit cards are unsecured loans. They have nothing except your word and your history. Since this is the case, unsecured loans typically have higher interest rates.

3. Lower monthly payments: Since the interest rate is lower and because you have one payment vs many, the amount you have to pay per month is typically decreased significantly.

4. Only one creditor: With a consolidated loan, you only have one creditor to deal with. If there are any problems or issues, you will only have to make one call instead of several. Once again, this simply makes controlling your finances much easier.

5. Tax Breaks: Interest paid to a credit card is money down the drain. Interest paid to a mortgage can be used as a tax write-off.

Sounds great, doesn't it? Before you run out and get a loan, let's look at the other side of the picture ? the cons.

Cons

1. Easy to get into further debt: With an easier load to bear and more money left over at the end of the month, it might be easy to start using your credit cards again or continuing spending habits that got you into such credit card debt in the first place.

2. Longer time to pay off: Most mortgages are the 10 to 30 year variety. This means that rather than spend a couple of years getting out of credit card debt, you will be spending the length of your mortgage getting out of debt.

3. Spend more over the long haul: Even though the interest rate is less, if you take the loan out over a 30 year period, you may end up spending more than you would have if you had kept each individual loan.

4. You can lose everything: Consolidation loans are secured loans. If you didn't pay an unsecured credit card loan, it would give you a bad rating but your home would still be secure. If you do not pay a secured loan, they will take away whatever secured the loan. In most cases, this is your home.

As you can see, consolidated loans are not for everyone. Before you make a decision, you must realistically look at the pros and cons to determine if this is the right decision for you.

Wesley Atkins is the owner of http://www.credit-cards-advisor.com- which aims to get you fitted with the best credit cards to suit your situation. With numerous credit card articles and easy online credit card applications you will never choose the wrong credit card again.

---

Debt Consolidation - Free Information About Consolidating Debt

Millions of consumers across the globe are searching for a... Read More

Bad Credit Debt Consolidation Loans - Getting a Debt Consolidation Loan, Even With Poor Credit

An online debt consolidation loan allows even people with a... Read More

Consolidate All Your Debt Into One Monthly Payment

Are you feeling overburdened with debt? Are you paying out... Read More

The Benefits of Debt Consolidation

It is quiet easy to get into financial difficulty having... Read More

Credit Counseling ? Get in Line Now to Avoid the Upcoming Rush

Credit counseling is a valuable service for consumers who have... Read More

All About Debt Consolidation Loans

Debt consolidation loans can be the answer to a number... Read More

Finding a Low Interest Debt Consolidation Loan

If you are in the market for a low interest... Read More

Debt Consolidation Benefits

If you've ever been in a situation where you needed... Read More

Pay Off Debt - Get Out Of Debt And Lower Your Monthly Payments

Debt consolidation can be confusing, especially if you have never... Read More

How To Get Rid Of Debt Problems Step 3 -- How To Negotiate Reduced Payments With Creditors

First, make a list of your creditors (NOTE: you should... Read More

Student Loan Consolidation

Student loan consolidation is one of the most used methods... Read More

Reducing Debt Through Lower Interest Loans

It happens to the majority of us, credit card debt... Read More

Use Caution When Entering Into Debt-Consolidation Loan

To the person drowning in debt, a debt-consolidation loan looks... Read More

Getting the Most Out of Consolidation Loans UK

Before letting too much debt or too many payments get... Read More

Finding a Reputable Debt Consolidation Company

If you are looking for a company that will help... Read More

Bad Credit Debt Consolidation Loan

Nowadays, many people can get into a bad credit situation... Read More

Perks and Pitfalls of Debt Consolidation

Whether you want to pursue debt consolidation in order to... Read More

Debt Relief From Debt Consolidation

If you are up to your neck in debt, there... Read More

Open the Cash Vault Inside Your Home

Believe it or not, many people do not understand equity... Read More

Debt Consolidation Mortgage: Home Solutions for Integrating Arrears

Credit card debts, auto loans debts, secured loans debts, unsecured... Read More

The Pros and Cons of Debt Consolidation Loans

You are swimming in debt. You have 4 credit cards... Read More

Debt consolidation ? Options for Reducing Credit Card Costs

Americans are using credit cards more than at any time... Read More

4 Debt Reduction Tips

If you are overwhelmed by debt, there are options you... Read More

Online Debt Consolidation Services - Lower Your Monthly Payments Now

Consumers looking for a way out of debt may want... Read More

Reducing Credit Card Debt

One of the easiest "things" that can happen in life... Read More

Debt Elimination: Legal! Lawful! Ethical! Debt Elimination Really Works

You are trying hard to eliminate your loans but keep... Read More

How Do I Know a Good Credit Card Debt Reduction Strategy When I See It?

Credit card debt reduction is an important part of the... Read More

Is There Something Called a Bad Credit Credit Card?

Is there something out there called a bad credit credit... Read More

Tracking Down Cheap Debt Consolidation Loans

In the modern world of expensive living and high interest... Read More

Debt Consolidation can Ruin Your Credit

Yes, Debt Cosolidation isn't a good idea and I'll tell... Read More

Debt Consolidation

Sometimes life can get on top of you and out... Read More

Debt Consolidation - Is It Really The Best Option For You?

It is a very common question that people pose to... Read More

Consolidate Your Credit Card Debt

With the popularity of plastic money in the present age,... Read More