Debt consolidation is not usually a solution for most people because it does not solve the problem. Then, there is a danger that people – if they continue with that pattern of spending – to reach an even worse situation: keep borrowing more (they may have consolidated the debt but continue using credit cards just to pay for current spending). Thus, it is not easy to get a new loan if they have no possibility to pay back. However, like for every rule there are some exceptions. Sometimes, we can get some cheap credit, which is worth to consolidate the debts, despite the risks.
But before describing such options, I would like to emphasize the following: the negative experiences make us stronger if we learn from them. If we choose to consolidate our credit card debts, is better to call the banks to cancel the credit cards once the debt has been paid off to avoid further possibilities of getting into debt again.
When is it Worth to Consolidate the Debts?
When we have access to a loan on affordable terms, we can save a significant amount in interest, and the monthly payment amount is low.
Some companies – unfortunately few – offer employees the possibility to get loans with a very low interest rate.
I am working company that offers two types of loans:
- With short-term loan, you can access up to three months’ salary, without interest. But you have to pay back no later than one year.
- The second type which is even better: the long-term consumer loan, through which the company pais up to six months’ salary with a good interest rate. Using such a loan for debt consolidation can be very helpful because you can afford big savings in interest rates.
Sometimes the family can be an invaluable support to consolidate the debts.
However, we must be very careful when we want a loved one to help us. Our commitment has to be much higher than in case of a bank. In this regard, it is important to sign a promissory note and document the terms of the loan to avoid any problems later.
It is also important that all payments are made through deposits to family’s bank accounts to have documents proving each payment. The family is the most important thing we have and losing the trust and affection of a loved one over money is one of the saddest things in life.
Before ending this article I want to emphasize again that debt consolidation does not solve the underlying problem, and if you still want to take advantage of any of these possibilities, you must be careful. Cancel all our credit cards after liquidating the loan amount for consolidation: thus you avoid the risk of falling into an even bigger problem. Losing the love and confidence of your family, or trust from the company for which you work, these are serious issues that I would not even think about.