The sad reality is that many people who get a debt consolidation loan to help them reduce their debt end up with more debt than they started with! Various studies have shown that as many as two thirds of people who get debt consolidation loans end up with more debt than they had before they got their consolidation loan.
The reason is relatively simple: the debt consolidation loan relieves the pressure you were experiencing, so you forget how you got into trouble in the first place.
If you owe money on five different credit cards and get a credit card debt consolidation loan, your life becomes easier; you forget what it was like to make five different payments each month, so you are more likely to fall back into the debt trap. You start using your credit cards again, and next thing you know, not only do you owe money on your debt consolidation loan, but now you also owe money on your credit cards.
The solution is also simple: when you consolidate, cut up your credit cards so you won’t be tempted to use them again. Once your debt consolidation loan is paid off, apply for a new credit card with a low limit to ensure you stay out of debt permanently.
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