Many people are attracted to credit card debt consolidation loans because it can help you to get rid of your financial burden and makes it significantly easier for you to settle all your debt. However, there are lots of things that can go wrong if you are not careful. The following are three credit card consolidation loans mistakes you should avoid.
The most common mistake that people make is to not do research prior to signing up with a credit card consolidation loan company. Many credit card consolidation loans companies don’t keep their promise about the low interest rates they advertise on the flyers so you must never just trust everything in the advertisement. Instead, you should start doing research by comparing the rates and terms between different credit card debt consolidation loan companies. You can read reviews, ask questions on debt consolidation loans forums, and get recommendations from friends.
Another mistake that people often make after consolidating their loans is to continue to use their credit cards when they are on the debt consolidation program. After you have paid some of the balance, you will free up some rooms in the credit card, which may tempt you to continue to use it to buy things. If you cannot control yourself, it is advised that you use a pair of scissors to cut the credit card into half. In this way, you won’t be able to use the credit card to make any purchase anymore. If you want a credit card for emergency purposes, you can choose a secured credit card. If you fail to pay back the balance you owe on the secured credit card, the bank will use the security you deposit to pay for the balance. This prevents you from spending more than you are able to afford.
Consolidated debt requires you to pay off the debt within a shorter period of time. Normally, the debt consolidation company will require you to pay the debt in 3 – 5 years. It is up to you to take the initiative to allot that specified amount of money for debt repayment. This takes a lot of discipline and good budget skills. You must not spend money on stuff you don’t need. There will be times when you face certain issues that require some money to fix them, but you must maintain your budget so that you always have money to pay for the consolidated debt on time.