Mistakes People Make when Trying to Reduce Debt Problems

On December 21, 2009, in News, by Lewis Alexander

Many people who are in debt will automatically try to use their existing credit cards to consolidate their personal debts.

  • This is a mistake that can cost you dearly.

In the long term it can cause a greater indebtedness.  Usually, credit card companies will charge considerably more for the combined credit, applying interest rates that will be far greater than the current average of all your interest being applied to all your individual accounts. The last thing you would want is a higher interest rate leading yourself deeper into the cycle of debt.

The problem of getting into debt may have been primarily caused by the credit cards in the first place. It is already a well known fact that many debtors wanting to consolidate their loans are doing so because of unmanageable credit cards and therefore it makes little sense to use credit cards to consolidate personal debt!

  • The whole point of trying to reduce debt is that you should be working to decrease your bills and outgoings.
  • The common mistake people make is to take the easiest way out to pay off their debt with credit cards as they still have a line of credit available.
  • This can cause a problem in the not too distant future if the individual suffers a further change in personal circumstances.

It is so easy to use more credit to pay for existing bills by paying one bill off and adding a new balance to a new or exisiting credit card or loan that will need to be paid off in the future.

The way to reduce your debt would be to get cheaper or less expensive rates of credit and pay off the more expensive credit first, which is usually credit cards.

You will find that credit and loan companies have large resources at their disposal in terms of the best lenders rates available and will have a better negotiating stance than you for the best debt consolidation loan rates. That action would achieve the desired results by reducing the debt in the long and the short term.

  • Your only problem could be the fact that your personal credit rating does not allow for your lenders acceptance for providing this new loan.

Let us imagine for a moment that you owe money on your mortgage, car payments, insurance and some household bills such as electricity and gas.

Your first stop should always be to approach your mortgage company to let them know of your situation, they are a priority creditor.

  • Burying your head in the sand will not make your debt go away!

It is quite amazing that people would take the easy way out and pay their mortgage using their credit cards instead of approaching the mortgage company and informing them of the personal debt problems. You will find that mortgage lenders are usually understanding of your problem if approached early on.

If the hardship is caused by a temporary situation from being out of work for a short while then this contact between you and your creditors can become a financial lifesaver.

You will still need a professional debt advisor if your situation persists and it is important that you find a way to reduce your outgoings in the long run to ensure you do not get deeper into debt.

There are a number of ways that an amount of personal debt outstanding can be consolidated and rolled into one new monthly repayment. Some of the most chosen options follow;

Each case is different and that is where a debt management company usually excels itself in providing the best advice for your own individual needs.

Lewis Alexander Financial Management offers a first class personal Debt Management Service, nationwide throughout the UK. We are based in Manchester, England and we have helped thousands of consumers suffering with personal debt problems in our history.

We have in house specialists who concentrate on debt management plans and personal debt consolidation and we have been looking after a great number of our clients for many years now.

Call Lewis Alexander on their personal debt helpline using 0800 018 6868, our lines are open 24 hours a day, 7 days a week and your call is FREE.

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