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What is the disadvantage of consolidating debt

While you may receive a mailing that mentions a great rate for a personal loan, “only the best qualified customers are going to get the teaser rate,” Bossler says.

If you use the loan for debt consolidation, you need to remember “you’re not paying off debt, you’re just transferring it from one type of debt to another,” Bossler says.

And, if you transfer your credit card bills to a personal loan, there’s always the chance you might charge new debt on your credit cards.

If you’re trying to pay down several credit cards, you may be able to roll all your bills into a personal loan, so you have only 1 monthly payment to keep track of, Bossler says.

Montanaro says that another advantage with a personal loan is you pay a set amount for a specific length of time.

If you need a way to pay for such things as an unexpected car repair or medical bill, or even finance a big expense such as a wedding, a personal loan often will have a lower interest rate than a credit card advance.

The average rate on a cash advance is 23.53%, according to Credit As interest rates climb in 2018, home equity loans might not be as readily available as they have been in recent years.You may consider the route of a personal loan instead.A personal loan “provides the opportunity to dig yourself out of a hole.It also has the potential to become a bigger hole,” Montanaro says.“It’s certainly an option you don’t want to ignore,” says J. Montanaro, a certified financial planner professional with USAA.Personal loans have become a fast-growing financing option for consumers, and demand continues to rise.We say “so-called” because most of them are actually necessary compromises that have to be made since no lender will ever simply reduce your loan for no good reason!But don’t let this get you down, because these “disadvantages” set a clearer path to saving and investing money that is possible only through consolidation.This means that you can do the math and find the “right” loan term from the lenders. It allows you to exert more of yourself, save, and invest money for things you feel perfectly align with your aims in life.The increased “overall” interest payment also leaves out the fact that only consolidated loans are tax deductable and can stave off 00 in interest payments.

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