The term “debt consolidation” has always cast a  charming spell on me. As if someway, someone would have the solution to mush my debt into single clean smart package, which through a kind of incredible financial alchemy would also then shrink the debt itself — and I would only had  to pay only a few hundred bucks or so.

I understand I am not the only idiot who has had this fantasy, as the whole industry has risen to support it: The Debt Consolidation Companies. Each morning, I receive at least one mail coming to me regularly with an offer of low-interest balance-transfer plans for managing credit-card debt, or arm-twisting email from some unknown credit firms that tell things like:

“DEBT RELIEF IS JUST A CLICK AWAY!”

“REDUCE YOUR MINIMUM MONTHLY PAYMENTS BY 50% OR MORE!”

“CUT DOWN YOUR INTEREST RATES DOWN TO ZERO!”

These claims are highly attractive to anybody who is caught in the trapped situation of having too much consumer debt, and who will believe any offer and take it as is.

“The biggest myth about debt-consolidation loans is that they’re easy to get,”

If you hardly need a loan, it’ is perhaps because you have already failed to pay some payments and your credit history shows more dings than and old car.

And that’s the main reason, if you does have a credit risk, the consolidating firm may tempt you with assurances of an easy to get loan, and charge you with higher interest rates than you are facing now – this may be as high as 20% to 22%.

Your monthly payment may be lower with any of such loans, but you’ll end up paying more.

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