How You Can Consolidate Your Debt for Free

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How You Can Consolidate Your Debt for Free

Tuesday, July 21st, 2009    Subscribe To Our Feed

People are beginning to change the way they think about money. Free Credit card debt consolidation and dealing strictly in cash are two of the new the most common changes that people are making. Truthfully, the only free method of paying off your credit card debt is doing it on your own.

A debt consolidation loan will require you to pay closing costs, but you may be able to have them added to your loan. Paying off debt with debt has gotten many people in trouble. debt consolidation loans, in most cases, are secured with your home. Defaulting on the loan can lead fo foreclosure proceedings. If you look at the recent economy, taking out a home equity loan a few years ago may have put you upside down in your home loan. This is a terrible position to be in.

A debt settlement company will charge you based on the amount of money they are able to save you on your credit card balance. The fee usually ranges from 15%-25%. So, if they save you $2,000, you will be paying from $300-$500 for this service with a net savings of $1,500-$1,700. There is a downside. You will have to pay taxes on that same amount and this transaction will not be reported favorably on your credit.

Credit counseling service is another option you have and for most people that want help managing their debt this alternative is best. You wiil see an interest rate reduction that will be under 10%. If you are currently paying over 20%, this is huge and will save you thousands of dollars and several years. Find out just how much you can save with an interest rate reduction just by playing around with any debt calculator. This service usually runs you about $30-$50 a month. A debt consolidation plan allows you the convenience of making only one payment each month.

Although these are not free credit card debt consolidation options, they are going to cost you less than what you are paying now. Some debt relief methods are better than others and not all will work for all situations. It will depend on your personal debt situation which debt relief solution will work best for you.