Ignoring the proper management of debt can lead you into big trouble. A study conducted last December by Alliance & Leicester Personal Loans said that although consumer debt was sky-rocketing, only 8 per cent of the people were really planning to consolidate their debts in the coming years. More than two-thirds said they saw debt consolidation as a ‘bad deal’ for the consumer.
On the other hand, Sainsbury’s Bank data showed that out of the 550,000 personal loans, which is a whopping £5.4 billion, people will take out over the next three months will be used for debt consolidation purposes.
But that shouldn’t deter you form running away from the situation, instead simply follow these five simple tips to consolidate your debt.
Do not pay for credit file information
If somebody tells you he can remove information from your credit file but at a cost, do not be fooled, because they might remove incorrect information. It is better you do-it-yourself.
Beware of extras
There are many firms out there who charge high interest rates and at times additional fees. Be wary of such companies who claim to offer services that would rebuild your credit history. Another thing is nobody can improve your credit record overnight, but you yourself. One thing you should always remember is that credit is easy to come, but how to organise our debts into more important.
Consolidating existing unstructured debt
Consolidating existing unstructured debt, such as credit card loan and overdraft in one personal loan, will not only save your monthly outgoings, but also clear your debt. However, make sure you do not extend the period over which you have to repay your debt as it will cost you more. Importantly, do not forget to read the terms and conditions before taking one.
Think before you act
Even before you think of going for a debt consolidation loan make sure you work out on how you’ll build up your debts. Only after you have understood the nitty-gritty of the loan, consider the options made available to you. If you feel you require further help go to a debt counselling service or discuss your problems with your present or previous lender.
Stay guard
Clearing or consolidating your existing debt does not mean that you have to start spending all over again. In future, you’ll have to stay guard against companies advertising special consolidation loans for restructuring your debt, in addition to providing extra cash over and above your current debts. By doing so, they are lending extra amount to you which works as a trap which you’ll have to pay later.
Posted
on : Tue, 15 Mar 2005 00:00 GMT | Debt News
By : Mike Lawson
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