Debt Reduction Advice | Debt Reduction Advice

Some trends are indicating that Americans are trying to pay down debt and save more. But according to a new study released by Prosper.com, more Americans are turning to debt consolidation. The survey showed that over the last six months, more and more people have been signing up for peer-to-peer debt consolidation loans and in January they hit an all time high, comprising 59% of loans on the site. Typically debt consolidation loans only equal about 45% of loans.

“Credit card rates have been going nowhere but up, and in the wake of the Credit Card Act they are likely continue to rise along with balance transfer and annual fees as credit card companies scramble to make up for income they were generating from egregious practices,”” said Chris Larsen, Chief Executive Officer and Co-founder of Prosper. But there are a few things to watch out for if you’re considering a debt consolidation loan.

• It may not be simple and easy. If you’re searching for a debt consolidation loan chances are you have missed some payments and are behind on a bill or two. But beware of rushing through the process of loan consolidation. You may be lured in by promises of quick money, but in actuality you’ll be paying higher interest rates than you expected.
• Beware of low introductory rates. You may be enticed by a deal that promises a low introductory rate, only to hike it up a few months down the road. Make sure you know exactly what you’re getting into.
• Negotiate better terms. You can negotiate and you should always try. You never know what better rate you may get if you ask.

Financial expert Jean Chatzky says there are pros and cons to debt consolidation that you should consider before signing on the dotted line. “One advantage to debt consolidation is that it gives you the convenience of paying one creditor each month instead of many,” she writes. Jean also says, ” Be careful. The danger is you can easily find yourself falling even deeper into debt. Basically, the loan will open up lines of credit that have been closed. Now that they’re open, you may be tempted to resume poor spending habits.” And because you’re only making one debt payment a month you may have the misconception that you’re handling your money better than you really are, she says.

If you’re still wondering whether debt consolidation is right for you, check out this Debt Consolidation Calculator from MSN Money. Put in details such as how much you want to pay a month, what your current debt payments are and if there are any fees for opening the debt consolidation. You’ll have a better idea if it’s a good move for your financial situation.

More Americans Turning To Debt Consolidation is a post from: Thistle Debt Consolidation