What exactly is "consolidating" your bills??

Question

I know this is sort of a dumb question, and I know what it means, they put all of your bills together for one monthly payment, but does it really help? or do they end up screwing you over in the end..? I have 3 credit cards way over due and I thought about doing this since my credit is shot. I'd appreciate the help, thanks!

Answer 1

It is not a dumb question. Lots of people consolidate their bills. Yes -- it means lumping all of your other bills onto one new, single bill. Often people will do this when a new credit card offer is for 0 % finance charge for a set number of months, so the temptation to consolidate is there. You have to remember -- the debt(s) do not go away just because they now will appear as one balance to be paid to another credit card company. You still obviously need the income and cash flow to be able to make at least the minimum monthly payment on the new account. Also - many credit cards charge a one-time fee for a Balance Transfer.' Each credit card company may charge a different fee, so - read the fine print before taking out a new credit card account. Remember - the debt must still be paid, no matter which company is the one that ends up wih the balance. Make sure that the fees do not outweigh the benefit(s) of consolidating.

Answer 2

Consolidating your bills is to: (for example) You have four different credit card bills, a couple student loans and an auto loan - if you were to consolidate you would take out one big loan, pay everything off and only have one bill to pay.

Check the current rate you are paying on your overdue credit cards, if you can get a lower interest rate it would be worth it. Also, if you are missing payments, taking out one loan with lower monthly payments over a longer period of time would be better because it won't ruin your credit. Missing payments will hurt your credit and sometimes it takes time to rebuild.

You may want to through out your credit cards too!!
Good luck!!

Answer 3

It would be best if you could get a low interest loan from a bank or credit union. You never know, your credit may not be as bad as you think.

It will be in your best interest just to get them off of your back but you don't need to get a loan if you cannot make those payments. If you interest is high you may wind up paying more instead of less.

Fill out an application and see what your payments may be. You interest should be determined based on your credit score.

Good Luck

Answer 4

Companies that offer deals to consolidate your debt make money by paying off your current credit cards (or debt), and then assuming the loan themselves, charging their own interest rate, often lower than you were paying previously. Does it help the consumer? Well, if you secure a lower interest rate it will help you financially. Also, if you have 9, 10, 20 bills you have to pay every month, consolidating them will make it much easier and more convenient to pay them as one big bill. Third, it will help to improve your credit rating, by eliminating multiple credit cards for one installment loan.

Answer 5

It depends who consolodates them. Most companies charge an incredible amount of interest. If a bank could give you a loan (under your described circumstances it may not be possible) the interest would be much less. Shop around, if you can find a few that are willing to lend you the money, choose the one with the cheapest interest. Even if it's just a few percent less than the credit cards, it's still saving you money.

Answer 6

You take out a loan which pays off all your bills and then owe one company one sum. Your bills are consolidated. Get help from a reputable credit company and not some loan shark.

Answer 7

The idea is to try to get a loan to cover all you separate loans, and that only works if you can get one at an interest rate lower than any of the loans you are trying to pay off.
Any outfit that wants to help you with that, but wants to charge you a fee, run the other way. There are some outfits that claim they do the service for free. They get their money from the lenders for straightening things out.

Answer 8

The majority, if not all, of these companies offering debt consolidation are running game. They charge outrageous fees, penalties and whatever other word you can think of for more money. They are unfairly targeting consumers who they categorize as poor decision makers. You are better off to find out the rules of dealing with your creditors, without paying any third parties.

Answer 9

It depends on whether or not it's a legitamate company. Your safest bet is to go thru a bank. Get a small personal/debt consolidation loan with a low interest rate, and you can have them paid off within a few years.

Answer 10

if its done right, you can have it done and pay off your debts faster with smaller payments. many credit companies will agree to lesser payments, lower or no interest rates and cut the amount owed in half. if you negotiate with the card companies, you can pay them off with the agreement that either its paid off or to a certain amount and the cards will remain active at that point.