Money Saving Tips

Debt consolidation Most people have several different debts, ie., credit cards, loans and overdrafts. Debt consolidation Companies advise that you can take the hassle out of this combination of monthly out-going payments, by consolidating debts, with no worry about tarnishing your credit rating. But it is not the case, when this method is in practice. Methods: The most popular method of consolidating debt is to move all of your loans to a single loan with a lower rate of interest. Unlike credit cards (that have annual percentage rates in excess of 10%), many loans are available at cheaper rates of interest. Borrowers need to pay one fee a month and can easily track the progress of their loan. But, you should only borrow, if you can secure a competitive rate of interest that will bring your monthly outgoings down. Best deals: Rates tend to vary 5.5% - 20%, but the more you borrow the lower the rate will be. Be careful with lenders who may calculate the annual percentage rate (APR) in different ways. There are secured and unsecured loans. A secured loan gives the lender a claim on your home, which you could lose if you do not repay it. With unsecured loans, you are not tied into anything, but if you default on repayments, this could prevent you taking out new credit cards, a mortgage or even taking advantage of an interest-free deal in a shop. Consolidation firms: There are many companies offering debt consolidation services on the television, who will charge high amounts for their service. They also can also damage your credit rating and in extreme cases could lose your home. Below are two of the organisations and impartial experts that will help you free of charge, in consolidating debts: 1. Citizens Advice Bureau: They advise on how to prioritise debt and handle it effectively. It also helps debtors work out repayments and negotiate with creditors to reduce payments. 2. Pay Plan : This is a free debt management company that works with the lending industry and consolidating of debts. They consider your monthly income and the level of debts and agrees a monthly payment with you, which they then distribute to your creditors on your behalf. They also negotiates interest rate reductions with lenders. After taking a debt consolidation loan do not start building debts back up on your credit card and increase your spending levels. It would be worth throwing away your credit cards and setting a realistic monthly budget to control spending.