Beware credit card debt consolidation deals
Consumers should be wary of offers to consolidate credit card debts and reduce payable interest rates as they can often just add to the debt burden, it has been claimed.
The Sydney Morning Herald reports that debt consolidation deals should be treated with caution, as while monthly payments may be reduced, the length of repayment can be extended dramatically and the overall outstanding debt can balloon rapidly.
"What the people advertising such services will not tell you is that when you refinance or consolidate debts, you usually put debt on top of debt, adding interest and extending the loan term," the paper warns.
A smarter option might be to request a hardship variation, which allows people leeway to either temporarily reduce or suspend debt repayments until their financial situation improves.
Hardship variations are available to anyone who suffers an unexpected change in circumstances or is otherwise reasonably unable to make repayments.
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