Should I Consolidate My Debts?
Sydney Morning Herald
Wednesday October 31, 2001
Lenders report that debt consolidation is an increasingly popular reason for taking out a personal loan.
In theory, someone who has racked up debts on a couple of credit cards can save on interest costs by rolling them into a single personal loan.
The benefit of such a strategy is that the consumer is forced to pay off part of the debt each month over a period of years.
Tony Devlin, manager of Creditline, Wesley Mission's financial counselling service, warns, however, that there can be a danger of falling into further debt if people fail to stop using their credit card.
And people who have been having trouble making payments on their credit card may find it difficult toget a loan.
``If you are having trouble repaying credit card debt then you are likely to have a bad credit record," he says.
He also advises consumers to look at the associated costs of a loan before rushing into a debt consolidation move.
``If there are not massive upfront fees then it may be worthwhile but you have got to carefully weigh it up," he says.
© 2001 Sydney Morning Herald
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