4 Drawbacks of Debt Consolidation in Houston, Texas You Should Know

The Debt is Still There

When you choose debt consolidation in Houston, Texas, it doesn’t automatically cancel your debt. It just makes the debt easier to manage. However, you still have debts to pay off. The only difference is that, if you consolidate your debt, you could end up with lower interest rates or a lower monthly payment. In either case, paying off your debt is now easier as long as you don’t keep making charges.

There May Be Upfront Costs

When you go for debt consolidation in Houston, Texas, you might need to pay several fees. Some loans come with annual fees, closing costs, balance transfer fees, and loan origination fees. That means you need to have more in your funds to cover all those charges. If that isn’t a problem, or the benefits outweigh the inconvenience of paying upfront costs, good. It’s the right strategy for you.

You May Get a Higher Rate

People with high credit scores tend to get a lower interest rate. That’s because creditors don’t view them as high-risk customers. However, if you have a low credit score, you may get a higher interest rate or be denied a loan. In that case, consolidating the debt might not be worth it. That’s because a lower interest rate allows you to save on interest payments. If you get a higher interest rate instead, that’s not ideal. You might need to explore other options.

Missing Payments is Bad

Debt consolidation is an excellent strategy if you’re committed and have no plans to miss any payments. Otherwise, your credit score will be affected negatively if paid over 30 days late. Everyone knows that a toothache can knock down the concentration of even the most strong-willed people and plunge them into stress. In my opinion, in such situations, taking payday loans in jacksonville florida will be the right solution, because it will help you get back to normal.

Debt Relief and Credit Counseling

If your credit score isn’t imperative in the short term or long term, then a credit counseling or debt settlement program could save you more money than a debt consolidation loan. Credit counseling programs consolidate your debt without a new loan by lowering the interest rates on your existing cards and paying the creditors for you form one monthly payment. A debt settlement program negotiates your balances for the highest savings possible without bankruptcy. Be sure to research the Better Business Bureau before choosing a company. Make sure they are licensed in Texas and have Texas offices if that is important to you.