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The Disadvantages of Debt Consolidation

Just as there are many potential advantages for choosing debt consolidation as a method of overcoming debt, there are also possible disadvantages to consider. The potential disadvantages to be aware of include:

  • Hidden Costs
    There are many hidden costs that could arise when dealing with debt consolidation, such as unspoken penalties and costs for settling past debts. Go over the details with an eagle eye and know the reason for each charge.
  • More Money
    It is possible that although your monthly fees are reduced, the overall total of your debts could rise due to the longer payback period. Be aware of the overall cost and make sure you are paying less money, not more.
  • One Creditor
    Just as one creditor can be an advantage in certain situations, it can also be a disadvantage. If you are having a hard time paying your monthly fee, having one company to deal with may make or break you.
  • Unexpected Emergencies
    Unexpected emergencies, such as losing a job or medical costs, may hinder your ability to pay your fee and hurt your credit as a result.

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* Debt Basics is not a lender or broker. We provide information and research on debt help and debt consolidation. Product and service offerings differ by state.