When your up to your neck in debt  “Consolidation loans” can suck you right in having you believe everything will be alright, this is not always the case while we do endorse Consolidation methods and provide many tips and facts on consolidating your debts we would also like to discuss the dark side of things so that you do not fall into these traps.

I am sure you have all received spam emails offering you quick debt relief, cut down loan interest rates, how i consolidated my loans into one small fee and so on, spam is everywhere and in an industry with as many cowboys as Americia has restaurants you really do need to be careful when looking into consolidating your debts, these promises are extremely alluring and can pull you in before you know it. Below are the 3 bad moves that are quite common these days so please have a read so that you do not become a lab rat for a dishonest businessman.

• 1) The Big Loan

One of the biggest problems is that of the theory that consolidation loans are easy to get, The consolidator is not stupid they understand that by you contacting them that somewhere along the lines you have mismanaged your finance the problem with this occurs when they promise you a quick-fix loan to consolidate debts into one company and hidden in the fine print of this contract sometime hides an interest rate that is higher than what you are paying currently on separate loans and credit cards.

• 2) Consolidators Big Promise

Everything will be fine they say, this is a fantasy they know you have and they will play this card all day long until you sign your life away, they promise to make all your debts go away, they swear that you will not be chased up by creditors anymore, this is all good and well however what you don’t know is that with some companies (NOT ALL) but some creditors will indeed include their service fee within you monthly repayments on top of their “consolation fee” this usually sits around 8-10% each and every month for the life of your new loan,  what you don’t know is that there is no fixed rate and they want you as a client so if your in this situation make sure that you negotiate your interest rate, even at 1% they are still going to make a decent amount from you. So that you understand just how much extra you could be left to fork out and pay, don’t forget to use our Debt Consolidation Calculator first before talking to anyone.

• 3) The Transfer Trap

Low interest transfer balance credit cards are just about offered on every street corner these days and when it comes to consolidating my debts creditors play this card also, these rates only last a short amount of time 12 months maximum and then they sky rocket, these rates are enough to suck you in but then you become stuck with very high interest rates. Many people use this option an before the interest rate goes up they switch to another company offering low interest rates and follow this method until their debts are clear, the problem here is that these moves end up at some stage or another on your credit report and they do damage your rating this will tarnish you for life and creditors will look at you as an even higher risk therefore having to increase your interest rate even further.

While not the best tips in the world they will surly save you bucket loads of money should you avoid the above consolidation moves, and again not all debt consolidation companies are this bad you just need to make sure you have a good chat to them before signing your life away, a little common sense is all that is required. We have many links around our website pointing to debt consolidation creditors all which are respected agencies so please check them out before making a choice of companies to consolidate with.