Monday, 23 June 2008

To Consolidate Or Not To Consolidate

Maybe it's the time of year or may be it is something in the water but I have been tempted to consolidate my debts and have only "one easy monthly payment". It does sound good doesn't! You have a set monthly payment which makes your budgeting easy and month by month your balance goes down as you clear your debt.
Ahhh - sounds wonderful but there is a little problem, for me at least there is, maybe there is for you too and that is I have been a bit of a serial consolidator. I have consolidated my debt in October 2001, September 2003, March 2005 and September 2006. Can you see a patten emerging here?
You would think I would have learned by now but wave a low interest rate in my face and I'm filling out the forms like there is no tomorrow. And that is just what happened last week and you are probably thinking "well, if the rate is lower than what your currently paying that is a good thing". You'd think but when I entered all my information to the online forms, my reply was to say that I did qualify for a loan and should call the number on the screen to get more information.
The wording should have told me it all but no! I called the number and found that the great rate had increased by 4.2%, not so great a loan now but did I say no? Well after some umming and arring on the phone I agreed to the loan at the increased interest rate. I knew that I had a seven day grace period should I decide to cancel it - good thing too.
I spend a day going over the number and it just wasn't worth taking up the loan and so I have cancelled it.
Really a no brainer as I would once again break my third rule of "not increasing my debt" as the interest is all added up front. Also I would have been tired into a two year payment plan and be paying more interest in the long run. I, of cause rejected the PPI offered and wasn't impressed by the method that was used to try and get me to sign up i.e. If you lost your job how would you pay for the loan? (Get another job??)
In September I pay off the consolidation loan I took out in 2006 and I know that like my debit card overdraft, re consolidating my debts just gets me into more debt.

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