latest nhpb_banner 1__compressed



State & Local Resources

Rent Assistance

Free Food Pantries

Utility Bill Help

Free Stuff and Money

Extra Income and Home Work

Public Assistance

Disability Programs

Section 8 Housing

Senior Assistance

Emergency Rent Assistance

Free Job Training

Free Money

Grants For Bills

Free Clothes & Supplies

LIHEAP Assistance

Telephone Assistance

Help with Water Bills

Charity Assistance

Church Assistance

Community Action Agencies

Medical Bills

Free Healthcare

Free Prescriptions

Free Community Clinics

Free Dental Clinics

Loans For Bills

Automobile Loan Assistance

Free Cash Loans

Debt Help

Mortgage Help

How to Save Money

Financial Literacy Help

Search the Website


Bill consolidation loans - The pros and cons.

If you have run up your credit card bills and are having trouble paying off your debts along with other monthly obligations due to a high interest rate, then consolidation may be for you. Depending on how high the interest rate is that you are currently paying, the debt can grow even faster than is possible to pay down. Many people fall further behind the the money they owe will continue to grow if you do not address those interest rates. You need to aggressively tackle the principal on your outstanding balance, and if most of your payment is going towards the interest you will not meet this goal.

A very effective solution to addressing your out-of-control credit card bills and other debts is to obtain a low interest rate loan. If approved, the key is to use the money provided for consolidation of the more expensive debts that are outstanding. The concept is to pay off a higher lender with the new, “cheaper” loan that is obtained.

More and more people are turning to these loans as they see the pros to taking this approach. They see how well they can work over the long term. They can be an important tool to help you manage and reduce your debt. They can be used for a number of different creditors, including credit cards, student loans, car payments or medical costs. They are very effective as the loan (with a lower interest rate) will allow more of your payment to go towards reducing the principal balance on the account in question.

What is a bill consolidation loan?
This is a low interest rate loan that is used to pay off all of your other outstanding debts or credit card balances. You would use them for any obligations you have that have a higher APR. A major pro to them is the money can be used for paying all types of creditors.

Some people can even in effect create their own bill consolidation loan by rolling over all of their outstanding debts onto a low interest rate credit card. A con to this approach is the borrower needs to only use the money for that purpose, and not for shopping or pay other living expenses. So they open a new account and then transfer the balance to the new credit card.

Pros of a bill consolidation loan?
You take out a low interest rate loan and use the proceeds to get rid of all your other unpaid debts and bills. So your high interest rate payments are eliminated. This allows the consumer to pay off more of the principal each and every month.





This approach will leave you with one low interest rate loan, thus reducing your costs every month and allowing more of your payments to go towards paying the principal. This will have the effect of reducing the overall balance in a shorter period of time. You should only need one loan if you qualify for the perfect interest rate. So this will also simplify your finances in that one lender needs to have a check written to them each month. Another pro is that bill consolidation loans are also good for getting you out of an adjustable rate product where the cost of financing can increase or change drastically.

Cons of a bill consolidation loan?
A low interest rate loan can only help you so much. For example, it doesn’t reduce your total outstanding debt and you still need to pay that balance off over time. While it does reset and reduce the interest rates that you are currently paying there are still several other steps you need to take as noted below.

It will allow you to start tackling your debts aggressively, however it is extremely important that you still need to establish a plan of attack for paying down the principal of your outstanding debt over the coming weeks and months. Individuals also need to develop a plan, such as a monthly budget, to ensure their finances are in better shape over the long term. You will not be successful if you just roll your debt over into a new lower interest rate bill consolidation loan and do not pay it off aggressively. The money needs to be paid out wisely to the creditors, and if that is not done, then the balance is still going to grow if you do that.

How can a bill consolidation loan help me?
You need to take advantage of the lower interest rates to pay down your principal. In order for this tactic to work for your situation, you need to pay the money you borrowed in full and on time. Another key is you have to find ways to cut back on your expenses, and it is imperative to limit excess spending. If you do not take those steps then the con of this approach kicks in, and you can just fall behind again in the near future.




What other options do I have to get out of debt?
Many. You can contact a credit counselor. There are thousands of these organizations located in many local communities. Statistics show that if you stick with a plan from a counselor, you will have a 60% success rate in reducing debt. A credit counselor is also very helpful in developing that longer term financial plan.

Another technique gaining traction is debt settlement. A pro for this type of program is that it can also be combined with a consolidation loan to provide more relief in a shorter period of time, This is the practice of eliminating debt by negotiating with your creditors and it can also help individuals address the principal due. Read more.


By Jon McNamara

“Related and Sponsored Links” are listed below.




Contact Us

About Us


Privacy policy

Financial Literacy

Search Site