Ask Suze a question or get another answer Please note: This is general information and is not intended to be legal advice.You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio, and a qualified legal professional before executing any legal documents or taking any legal action.Harpo Productions, Inc., OWN: Oprah Winfrey Network, Discovery Communications LLC and their affiliated companies and entities are not responsible for any losses, damages or claims that may result from your financial or legal decisions.The logic behind debt consolidation loans may seem sound and this type of borrowing can make great practical sense, but you need to beware of the pitfalls that could make it go very wrong. Small loans, payday loans, overdrafts, store and credit card deficits can all charge extraordinarily high rates of interest, while the very best rates are usually only available on bigger loans.In fact, consolidation is one good way to get out of default.(To learn about other ways to get out of default on student loans, see Student Loans: Getting Out of Default.) A consolidation loan allows you to combine your federal student loans into a single loan with one monthly payment.I need to consolidate them but have not found a bank willing to do so. Even if they came through a private lender, you can consolidate them through the Federal Direct Consolidation Loan program, which offers different repayment schedules that are meant to help you take control of your debt.But with 0,000 in debt, you probably have some private loans in your portfolio, too.
Lumping all your debt into one place (perhaps secured against your home) and having lower monthly repayments could tempt you to take on additional short-term borrowing, building your overall deficits into a fiscal time-bomb.
Private student loans cannot be included in a federal consolidation loan.
Yet you may get socked with higher fees when using them, compared to traditional bank checking accounts where fees also are rising, according to a recent Consumer Reports study. The reason: You can’t spend more money than is on your card.
In response to this growing business model, the FTC put together the Debt Relief Rules which took effect October of 2010.
The regulations are very comprehensive and are aimed to curb deceptive and abusive practices associated with debt relief services offered by debt consolidation companies.