Advantages and disadvantages of consolidating debt
Debt consolidation is a financial terms that’s often confused with other types of debt solutions, such as debt settlement or debt management.Before you consider debt consolidation, understand what it is – namely consolidating your smaller debt piles into one large debt pile.
Even though you’re borrowing your own money, you have to pay it back within five years.
You accomplish this by transferring your credit card debts to one credit card with, ideally, a low interest rate, taking out a home equity loan, a home equity line of credit, tapping into your retirement or taking out a consolidation loan.
Debt consolidation may make sense in some cases, but it is not a magic solution to your debt problems, financial adviser Liz Pulliam Weston at MSN Money notes.
Available credit counts for 30 percent of your credit score.
Being maxed out, or close to it, on a card lowers your score.