Is consolidating debt bad for your credit ro mantik dating
Most retirement plans allow you to borrow against them, but there are some drawbacks to consolidating with a 401k loan.
For starters, the loan has to be repaid in five years or it will be considered an early withdrawal and will be subject to a penalty and income tax.
Not only that, if you leave your job the loan will be due within 60 days or you’ll face early withdrawal penalties.
Think long and hard before borrowing from your retirement and do it only when the other option is withdrawing from retirement.
If you fall behind on your payments, you face foreclosure, which is much worse than defaulting on your credit card payments.
Debt consolidation loans are used solely to combine all your debts.
Before you consolidate debt with a balance transfer, make sure you’ll actually be saving money with the transfer.
If you’re dealing with a manageable amount of debt and just want to reorganize multiple bills with different interest rates, payments and due dates, debt consolidation is a sound approach you can tackle on your own.
» MORE: Follow these 3 steps to pay off debt Two additional ways to consolidate debt are taking out a home equity loan or 401(k) loan.
Wouldn't it be easier to just pay one bill and take care of all your credit card debt?
You can consolidate debt by combining your debt payments and pay off your debt quicker.