Debt Consolidation Pros Vs. Cons (Updated as of 2018)

The land of the Free, America! But yet, 11+% of credit card borrowers are behind on monthly payments and basically a slave to debt. Is that fair? Debt consolidation companies are promising to free Americans from debt and give people financial freedom, but in reality, these debt consolidation companies are only looking to make money.

debt consolidation ads on Google

So, what is the key to achieving financial freedom? Well, debt relief, settlement and consolidation programs can help, but make sure to first educate yourself on the pros and cons of each plan, so that you can truly understand what you are getting yourself into and know that it’s not all benefits!

How Credit Card Debt Relief Programs Work & Affect Credit Scores?

3 Biggest Benefits of a Debt Consolidation Loan

  1. If the interest rate and fees on the debt consolidation loan are adding up to less than what you are currently paying, the biggest benefit is that you will save money and have a lower payment. Just make sure to add up the figures with a debt calculator, and not just look at the monthly payment. On a debt consolidation loan, the payment can be smaller than what you’re currently paying, but will you be paying on the loan for the rest of your life? Look at the entire picture and use an actual debt calculator tool like this one here to really add everything up and truly compare side by side, how much you are paying now versus what you’ll pay with the debt consolidation loan.
  2. Have only a single monthly payment, making it easier to manage your debt.
  3. Improve your credit score with a debt consolidation loan. As soon as you get the loan, immediately use it to pay off your existing debts.

3 Biggest Downsides of a Debt Consolidation Loans

  1. You are dealing with your debt problems by getting more debt, does that make sense? If you can save money in interest, as we talked about above, then yes it makes sense. However, the concept itself can be mentally draining. Now you’ve taken on another loan, adding more stress. Wouldn’t it be less stressful if you were to use a debt relief program and reduce your balances? Unfortunately, debt relief programs can hurt your credit score, but looking at the long-term you can develop a plan to rebuild your credit score and save money when using a debt relief program, often making this a smarter route than using a debt consolidation loan

Spending so much after College

I graduated from college about five years ago, and no one had told me that I would get into so much credit card debt ! I got my first credit card just when I was getting into work, and it started from there. I was accumulating so much debt, and using my credit card left and right, justifying my expenses by saying that it was all necessary for me to spend so much because I was investing in my future.

I was spending for an expensive mobile phone, designer clothing and bags, expensive restaurants, and so on, when I was earning at a new hire’s salary. Stupid move, within a year, I had maxed out my credit card, and I really did not know how to pay for everything.

And then, I found myself with a flyer that talked about credit card debt relief programs. It sounded like something that would be really useful for me. I knew I had to do something about my finances, and I was getting desperate! My salary was all going to paying the interest of my credit card debt, but it was not helping in any way of reducing the balance of my debt. It was honestly such a headache to deal with! I really was in a lot of debt!

My desperate thoughts led me to inquiring about these credit card debt relief programs, and I saw immediately how it could benefit me. And, I really think I made the right move. I inquired at the company, and they gave me a lot of options that I could consider. I was initially really thinking of calling for bankruptcy, but I was afraid of what may happen. I was not even 30 years old, and I had to claim for bankruptcy? How embarrassing! But, good thing this company saved me from making that move.…