Consolidating debt without hurting credit

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Something has to change, and you’re considering debt consolidation because of the allure of one easy payment and the promise of lower interest rates. But the truth is debt consolidation loans and debt settlement companies suck even more. In fact, you end up paying more and staying in debt longer because of so-called consolidation.Get the facts before you consolidate your debt or work with a settlement company.The debt includes a two-year loan for ,000 at 12% and a four-year loan for ,000 at 10%.Your monthly payment on the first loan is 7, and the payment on the second is 3. If you make monthly payments on them, you will be out of debt in 41 months and have paid a total of ,821.And now the total loan amount would jump to ,103.So, that means you shelled out ,282 , although often the terms are used interchangeably.Some companies know holiday shoppers who don’t stick to a budget tend to overspend then panic when the bills start coming in.

You don’t need to consolidate your bills—you need to pay them off.

So basically, your debt would go from ,000 to ,000–60,000.

If that’s not bad enough, fraudulent debt settlement companies often tell customers to stop making payments on their debts and instead pay the company.

Pay attention here, because these crafty companies will stick it to you if you’re not careful.

We’ve already covered consolidation: It’s a type of loan that rolls several unsecured debts into one single bill. Debt settlement means you hire a company to negotiate a lump-sum payment with your creditors for less than what you owe.

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