Debt Consolidation, Are You Getting Into A Scam
With the weak economy we have right now there are a lot of places that are offering debt
consolidation. Some of these are offering just the help you need but others are just simply
scams. It is easy to see how it happens when interest rates can vary over 25%.
In some cases you can see the scam. When the interest rate is much higher than you started
with you know you are being scammed.
The question now becomes “Are they all scams?” or “Does it really help at all?” and the
answer is no and yes, respectively. If you shop carefully you can find a provider that will help
you by lowering your overall debt payments and save you money.
The History Of Debt Consolidation
The history of debt consolidation goes back about 20 years or so. Larger lenders realized
they could make money by taking on higher interest debt with their own money and still make
it worth while for the consumer. The consumer would benefit from the lower interest rate and
administrative cost as well as the convenience of having a single monthly bill. The lenders
made money by lending more money.
At first consumers embraced this new service. It truly was a positive tool to help many people
crawl out of debt. The innocence did not last long as some lenders saw it as a way to rope
people into more debt. This is when the scams began. Soon unscrupulous lenders started to
offer high interest loans to people no one would touch.
Avoiding Getting Scammed
Luckily for the consumer, avoiding getting caught in a debt consolidation scam is pretty much
common sense. To do it, all you need to do is use common sense and keep your eye on the
numbers. If the interest rate seems high look at what it is doing to your payments. The sum
of your current payments should no exceed the new payment. The key is to keep shopping
till you find a good deal. There is no law against shopping around.
When done correctly, debt consolidation can be your way out of over whelming debt.