Making Sense Of Cents

Learn how to make extra money, how to save money, how to start a blog, and more.

JOIN OVER 300,000
MONTHLY READERS!
  • HOME
  • BLOG
  • About
  • Categories
    • SAVE MONEY
    • Side Job Ideas
    • Blogging Tips
    • Budget Tips
    • Career Advice
    • College
    • Pay Off Debt
    • Extra Income
    • My Life
    • Minimalism
    • Pet-Related
    • Real Estate Help
    • Retirement
    • Product Reviews
    • Self-Employment Tips
    • Travel
      • RV Life
      • How To Get A Cruise For Cheap Or Even FREE!
    • Wedding
  • How To Start a Blog
  • FREE FB GROUP
  • Recommendations
  • Contact
    • Contact
    • Advertise
    • Blog/Website Coaching Services
  • How To Save Money
  • Make Extra Money
  • Affiliate Marketing Course
  • Travel

Pros & Cons of Debt Consolidation

December 7, 2017 BY Michelle Schroeder-Gardner - Leave a Comment

This post may contain affiliate links. Please read my disclosure for more info.

Share
Pin
Tweet
Flip
Share
+1
Share
Stumble

How much have you heard about debt consolidation? Do you have a lot of debt and unable to pay? You might be thinking about debt consolidation. Before you go with debt consolidation, you must remember that it has some advantages and also disadvantages too. Many peoples think about it that it is right to move to get rid of debt, but once you come to know about some potential drawbacks, you might want to change your decision.

Pros & Cons of Debt Consolidation

Pros of Debt Consolidation

There is some good thing that forces you to go ahead with debt consolidation. Some of them are below that are the advantage of it.

Combine multiple payments into single

When you are consolidating your existing debt, you are paying multiple payments together. So you don’t have to worry about whom to pay first and whom to pay after. You are spending all of them at once.

Lower Interest rate

Have you ever thought how much amount you are paying as an interest each month? E.g., Credit card bills, your home loan, care loan many more? Counting all of their interest together will be hundreds of dollars and even thousands of dollars as finance charges. When you combine all of them, you need to pay only the interest on one loan which you can have at the lowest rate. So you will be saving yourself a lot of money regarding interest for all other loans and bills.

Lower Monthly payment

You might be paying your debt month after month and still not getting out of your debt. However, debt consolidation loan helps you to get rid of it and lowering your monthly payments much possible. You will have to pay only one payment and one interest which is lower, your monthly spending on payment will be less than regular.

Cons of Debt Consolidation

The potential for more debt

Since you are paying all your debt together, your monthly spending on paying will be less. So you will have more money to spend. Some people's use this money in buying some unusual stuff while some smart consumers will save money to pay a debt. However more people's use that money for their usage, and such peoples find their self again in debt again.

Spending more in long run

Even If the interest rate is lower, your loan tenure might be more, and it takes a longer period to pay back your loan. So that the amount you are paying for a longer run will be higher. So you need to manage your incoming money and stay organized to pay your debt as quickly as you can.

It could ruin your credit

Some debt consolidation companies claim to be debt settlement negotiators. They know that you are paying them lump sum amount, what they do is hold your money intentionally. They don’t spend your money to your lender, they try to settle your payment at lowest rate as possible, but the thing is that your payment is still not paid to your lender. So your credit history will be ruined by this and credit score too.

We hope pros and cons about debt consolidation have helped you. If you think we have missed some important point that needs to be added in the article to make it more useful, feel free to suggest us in the comments below.

Join the free Master Your Money course!

Join the free email course and finally learn how to manage your money better, pay off debt, save more money, and reach financial freedom.

Success!

There was an error submitting your subscription. Please try again.

Powered by ConvertKit

Related Posts

  • Loan Consolidation: The Pros and ConsLoan Consolidation: The Pros and Cons
  • 5 Benefits of Debt Consolidation Loans5 Benefits of Debt Consolidation Loans
  • Manage Your Finances with a Debt Consolidation LoanManage Your Finances with a Debt Consolidation Loan
  • What Are My Options for Student Loan Consolidation?What Are My Options for Student Loan Consolidation?
  • Carnival of Money ProsCarnival of Money Pros
  • Treat Yourself: 6 Ways To Invest your Tax-RefundTreat Yourself: 6 Ways To Invest your Tax-Refund
Share
Pin
Tweet
Flip
Share
+1
Share
Stumble

Leave a Comment
Filed Under: Writers

About Michelle Schroeder-Gardner

Michelle is the founder of Making Sense of Cents, a blog about personal finance and traveling. She discusses how her business has evolved in her side income series. She paid off $40,000 in student loans by the age of 24 mainly due to her freelancing side hustles. Click here to learn more about starting a blog!

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *


Hello and welcome!
My name is Michelle and I'm the author/owner of Making Sense of Cents. Learning how to save money and make more money changed my life. It allowed me to pay off $40,000 in student loans, start my own business, and I now travel full-time.
Follow on Bloglovin

Subscribe Via Email

As Seen On

Subscribe Via Email

HOME
DISCLAIMER
CONTACT

POPULAR POSTS
How To Make Money Blogging
How To Start A WordPress Blog On Bluehost
How I Paid Off $40K In Student Loans By 24
75 Ways To Make Extra Money
Please note that Making Sense of Cents has financial relationships with certain merchants mentioned. While all attempts are made to present correct information, it may not be appropriate for your specific circumstances and information may become outdated. Copyright © 2018. All Rights Reserved.

© 2018 Making Sense of Cents
Design by Olive & Ivy Design