Is debt consolidation something you’re currently considering? It could be the best idea to help you pay off your debts; however, it’s important to get all the facts before making a final decision. According to a recent story from Smart Asset, some companies sneak in hidden fees and frequently change rates. You could end up paying even more and possibly impair your credit score.
A recent CNN Money column showed that debt consolidation comes with its own risks. “Many private debt-consolidation companies charge exorbitant fees and interest rates. Once the low teaser rate on your new card or loan has expired, any outstanding debt takes on a rate that’s significantly higher — which means consumers might end up spending more money to pay off their consolidated debt than they would have if they had simply stuck with their original loans.
In that type of scenario, CNN explains, consumers will see their three-digit credit scores fall. This can be a problem; lenders of all types rely heavily on those scores to determine who gets loans and at what interest rates. Consumers with weak credit scores will have to pay higher rates to borrow money, if they can even convince lenders and banks to loan to them at all.”
If you still aren’t sure what is right for you, stop by any of our 12 First National Bank & Trust of Newtown branch locations to ask questions or talk to us here by commenting on this blog post.