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Two words for you: , although often the terms are used interchangeably.We’ve already covered consolidation: It’s a type of loan that rolls several unsecured debts into one single bill. Debt settlement means you hire a company to negotiate a lump-sum payment with your creditors for less than what you owe.You don’t need to consolidate your bills—you need to delete them.To do that, you have to change the way you view debt!Most of the time, after someone consolidates their debt, the debt grows back. They don’t have a game plan to pay cash and spend less.In other words, they haven’t established good money habits for staying out of debt and building wealth.Here’s how credit card consolidation works: You first decide if you want to take out a new loan, open a new credit card or enroll in a debt management plan (more on that later).

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They’ll leave you on the hook for late fees and additional interest payments on debt they promised to help you pay!

Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt. The debt includes a two-year loan for ,000 at 12%, and a four-year loan for ,000 at 10%.

Your monthly payment on the first loan is 7, and the payment on the second is 3. You consult a company that promises to lower your payment to 0 per month and your interest rate to 9% by negotiating with your creditors and rolling the two loans together into one. Who wouldn’t want to pay 0 less per month in payments?

Here are the top things you need to know before you consolidate your debt: But here’s the deal: debt consolidation promises one thing but delivers another.

That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.

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