Many people in the UK are burdened with mounting debts. Common types of debt include credit cards, store cards, bank overdrafts and loans without security.
There are two big problems associated with these kinds of debt:
1. They incur higher rate of interest.
2. Debt trap is cyclic in nature.
Very often, people slip into debt cycle gradually, perhaps because of some change in their lifestyle. Often a vicious circle of debt takes over, with debts piling on quickly. If you find yourself in such an unfavourable situation, it is important to take control and to begin coming out of the debt.
Benefits of Debt management:
For many people, debt management service offers a practical solution to this problem. There are two key benefits of this service:
1. By replacing a set of loans (credit cards, overdraft, etc) with a single loan at a fixed rate of interest, you can begin to regain control over your finances and have a debt free life.
2. By securing the loan on property (i.e. your home) you can borrow at a lower rate of interest, and reduce your monthly outgoings by up to a half.
Pitfalls: It seems that debt management service is likely to solve a lot of problems, so what could the downside possibly be?
Simply stated, the debt management is not a universal solution to all the problems of debt. Sometimes when you have cleared your overdraft and credit card bills and reduced your monthly payments, you might be tempted to start overspending again, running up further debts and ending up in a worse condition than before! That does happen, and before taking this service, you need to ask yourself whether you would be likely to do the same. If you cannot honestly answer "no", then debt management may not be right for you. If debt is a way of life, if you have consolidated debts before, or if you don't trust yourself to use the prospect to come out of debt, then debt management may not be the answer for you.
A debt consolidation loan will be the right answer if you have temporary slipped into debt (perhaps due to a change in personal circumstances like job loss) and quickly want to get out of debt. It cuts your interest rate and your monthly repayments and simplifies your finances, putting you back in control. By securing the loan on your residential property, you may get an affordable loan deal. The benefits are that you can cut your monthly bills, and at the same time, pay off your existing debts in a controlled time frame.
