All debt in one easy payment

It sounds too good to be true. Instead of paying the American Express, Visa, Best Buy and White Hall jewelry bills every month, you could pay just one bill. Debt consolidation is, in a nutshell, getting a bank to bail you out of trouble. They loan you money so you can pay off all your debt. Then you pay one lump sum every month to the bank.

Why it's better than bankruptcy

In many cases bankruptcy lawyers advise their clients to pay back their debts. Many people have money taken out of their paychecks to cover amount owed to credit cards filed as part of a bankruptcy. But with bankruptcy, your credit history is essentially ruined for up to 10 years. Instead of wasting the next decade of your life, pay back your debts. Go to a reputable bank and tell them you want them to provide a low interest loan so you can get out of debt. Remember you are not really out of debt yet. You still need to pay back the loan. But it sure feels better to see that zero balance on the Visa card that paid for the trip to the Bahamas, the expensive restaurant on your friend's birthday, the new outfits and college tuition.

Search for the best rates

When searching for a debt consolidation loan, shop around. Visit different banks or check on-line. Find a bank that offers the lowest interest rate and that can give you a reasonable length and terms for the loan. Make sure the amount you would pay every month is affordable. Make sure there is no penalty for paying off the loan early or doubling up on payments every month. Some banks might even offer a chance to make payments twice a month if you are paid twice a month. It's a good idea to have the money taken automatically out of your paycheck, twice a month if at all possible. You will pay off the debt sooner and you won’t forget or get behind on payments.

Stay out of debt

Now that you have a zero balance on your credit cards, cut them up except one or two. You don't need more than one or two credit cards to establish and keep good credit. Make a budget. Don't put more than a small amount on the credit cards and pay them off every month.

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