If you are struggling to pay off your debt, you may have considered consolidating your debts in to one easier payment. But will it help? MSN Money took a look:
The most popular way to consolidate debt is to take out a new loan and use that loan to pay off any other debts you may have. Finding a loan that works with this purpose is not always easy, but when done correctly, it can be a great relief to reduce payments to just one.
Another option could be a debt management plan (DMP), generally offered through credit counselling agencies. This is a good option if you find that you are maxed out on multiple credit cards and are struggling to get loan approval to consolidate. With a DMP the agency will negotiate with the banks a lower payment and interest rate. You pay the DMP what you can, and they’ll take care of your creditors.
Alternatively, you could switch your current credit card balances to a credit card offering a zero free or low-interest period. If you decide to take this route, you could save yourself hundreds of dollars in interest, but you need to ensure you are disciplined enough to pay the balance off in full before the time period runs out. When this happens you will most likely be lumped with a high interest rates. You may also need to see if there will be any fees for transferring your balance to another account.
