Consolidating credit card debt good idea
If we’re talking about a mortgage or car loan we’re dealing with secured debt.
This just means that the underlying asset is used as collateral for the loan.
alternative to a credit card consolidation loan, you can work with your creditors and your budget to develop a plan to wipe out debt on your own.
You might pay down your debts through a balance transfer or interest rate negotiation.
As you can see, if you use a home equity loan to pay off your credit cards you just traded in that unsecured debt for secured debt and you could lose your home if you can’t keep up with payments.
If you have a 401(k) plan at work there’s a good chance that you’re allowed to borrow from it with a loan.
While it’s important to reduce your debt load and try to begin creating wealth it’s also important that you take the right steps toward repaying your debt.
These loans often seem like a good idea because you’re just borrowing some of your own money and paying it back over time.
So, you can essentially borrow money with attractive terms, pay off your high-interest debt, and then in a few years have your 401(k) replenished.
It’s important to note, however, that a DSP will have a negative impact on your credit.
As with the DMP, you’ll also receive financial education to help you get and stay out of debt for the long term.
Now if you fail to make payments the bank is going to take your house away.