A debt consolidation loan will require you to pay closing costs, but you may be able to have them added to your loan. But, if you have debt it is not in best interest to payoff debt with debt. Most debt consolidation loans are secured with your home. The bad news is that your home can be foreclosed on if you default on the loan. If you look at the recent economy, taking out a home equity loan a few years ago may have put you upside down in your home loan. This is a terrible position to be in.

A debt settlement company will charge you based on the amount of money they are able to save you on your credit card balance. The fee usually ranges from 15%-25%. So, if they save you $2,000, you will be paying from $300-$500 for this service with a net savings of $1,500-$1,700. But, here comes the downside. You will have to pay taxes on that same amount and this transaction will not be reported favorably on your credit.

Credit counseling service is another option you have and for most people that want help managing their debt this alternative is best. Your interest rates will be reduced to below 10% in most cases. If you are currently paying over 20%, this is huge and will save you thousands of dollars and several years. Get onto any credit debt calculator and you will be amazed at what an interest rate reduction can save you. This service usually runs you about $30-$50 a month. One of the big advantages is making only monthly payment to make all of your credit card payments.

Although these are not free credit card debt consolidation options, they are going to cost you less than what you are paying now. Some debt relief methods are better than others and not all will work for all situations. It will depend on your personal debt situation which debt relief solution will work best for you.

How does debt consolidation work with a loan? A debt consolidation loan is usually secured with collateral and in most cases that is your home. While this is an alternative for getting out of debt, I do not consider it a good one. What happens is you will be paying off your debts with the equity in your home. You will ultimately be paying your debts in the form of a house payment. Your payments may be lower, because you are paying them off over a longer period of time. Your interest rate will be lower and the interest you pay will be tax deductible. The downside—if you default on the loan, the lender can foreclose on your home. Statistics show that most people that enter into debt consolidation loans have credit card debt again within a year.

How does debt consolidation work with a credit counseling service? The credit counseling service works with your credit card companies to have your interest rates lowered and your fees eliminated. You will make one payment each month to the debt counseling service and they will disburse it to your lenders. Your credit card accounts will be closed, but your collection calls will stop and your debt will decrease. You do not have to enroll all your credit card accounts. This is a credit score friendly version of debt relief. The program normally takes about 5 years to complete. This is a good option as long as you do not wait too long to become enrolled in a debt management plan.

These are the two most popular options for debt consolidation. Take some time to think about your financial situation and what will work best for you before making a credit card debt relief choice.

If you talk to true financial experts, they will all tell you that taking out a loan to pay off your debt is one of the worst decisions you can make. And bad credit loans are twice as bad. There are consequences for having bad credit. If you can get a loan at all, you will be paying a higher interest rate for that money and in the end it will most likely end up costing you hundreds and even thousands of dollars more.

It is rare to be able get a debt consolidation loan that does not involve using your home as collateral. Worst case scenario…if you default on this loan the lender could foreclose on your home. If you do nothing and do not have a debt consolidation loan, the worst thing that can happen is you can be sued for the money that is owed. If you are working the lender would probably garnish your wages, which would not be pleasant. But you would still have a roof over your head.

The other problem with debt consolidation loans is the homeowners still have the credit cards and many times they do not stop using the cards. Within a year, many people that take out home equity loans will have credit card debt again.

Credit counseling is a better method for managing credit card debt; if you feel you need outside help. This is not a bad thing. As long as you can make a 2% payment, debt counseling can have you debt free in about five years. Bad credit debt consolidation loans should never be considered as a debt relief option.

The best way of selecting a debt elimination method is to look at several aspects of your finances. How much do you owe? How long past due are your payments? How disciplined are you at following a plan? Answering these questions will help you pick a plan that will work best for you.

One thing that is for certain…a loan is not in your best interest. If you do not have a decent credit score, you may get an interest rate that is high for the type of loan. The other problem with loans is that most of them are secured and that usually means using your home as collateral. There is no credit card in the world that is worth losing your house over and that is a possibility if you default on a loan that uses your home as collateral.

Credit counseling and debt settlement are the other two options that most people will choose when they need debt help. These solutions are both different and if you are not sure which one would be best for you, it might be best to find a company that offers both. It is common to find debt management companies that offer a selection of debt relief alternatives, because not everyone needs the same type of debt relief.

There is no best placerate for debt consolidation loans. A loan should not be considered as an option for getting out of debt. Your best option is an aggressive snowball repayment plan, but know that it is not the only method for repaying your debt.

First, if you are considering consolidating your debt, I would not consider a loan a smart financial decision. It is only moving the debt from one place to another and in most cases a debt consolidation loan is going to be secured with your home. This can lead to many potential problems. The worst case scenario would be losing your home to foreclosure.

If you are able to pay more than the minimum payment on your debt, I would consider using a snowball plan to get out of debt. Make a list, free up some cash and begin paying aggressively. This is going to be the best of getting out of debt, but it is not going to work for everyone.

If you are only able to make minimum payments, credit counseling is something you should look into. The credit counseling agency will have your interest rates reduced as well as you fees eliminated and these two things can save you hundreds of dollars over your repayment period. And the best part about this option is it does not require a loan. There will be a small fee each month, but with the interest rate reduction you are still coming out ahead of the game. Affordable debt consolation can be just a mouse click away.

The big difference between an unsecured loan and a secured loan is collateral and in the biggest majority of cases the collateral is going to be your home. The bottom line is using your home to secure a debt consolidation loans is not a good idea.

Statistics show that many people who take out a loan to pay off credit card debt often find themselves with more credit card debt again within a year. If something happens and you cannot make your payments, the lender has the right to foreclose on your home. There are other options for getting out of debt that will not put your home in jeopardy.

Unsecured loans are not secured with collateral. They are given to you just by signing for them. However, you are going to pay more in interest for a loan that is not secured. The lender is taking a bigger risk with an unsecured loan. If you do not make your payments, their only recourse is to sue you and they are not necessarily guaranteed the money, as in foreclosure.

If you are consolidating debt, it is not recommended that you get another loan. In most cases excess debt is incurred do to unfortunate circumstances or poor decision making. Paying off loans with other loans does not usually get you ahead.

Today, your best options are debt counseling or debt settlement. Which one of these options you choose depends on how much debt you have, how past due your debt is and if you can comfortably make a minimum payment. If you are not more than a month or two past due and can make a minimum payment, credit counseling is kinder to your credit.

However, if you are more than 2 months past due or cannot make a minimum payment, debt settlement is going to work better for you. This option lowers the amount of your credit card balance. The big disadvantage is what debt settlement will do to your credit. The object here is to get out of debt as quickly as possible and rebuild your credit when you are done.

Citibank does offer unsecured debt consolidation loans, but before you take out a loan to consolidate debt you should consider all of your debt relief options. Find out how you can be debt free in less than 3 years and on your way to financial freedom.