How Do Debt Consolidation Loans Work?

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Debt consolidation loans allow consumers to pay off credit card bills with the help of a bank loan. Consumers should be mindful not to go back into debt after paying off credit cards. Find out more about debt consolidation with information from a registered financial consultant in this free video on money management.

Part of the Video Series: Money Management
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Video Transcript

This is financial advisor Patrick Munro talking about how debt consolidation loans work. Debt consolidation loans are a valuable tool to the consumer that has taken the time to keep his credit or her credit score in a very solid context where they are not losing credit score due to not paying their bills on time or having too many credit cards open. What happens is you can bring your credit card bills or various ancillary bills to a bank and then one by one they will pay those down to zero. Then, you will have one payment to be made to the bank, that is your debt consolidation bank payment. And it can be done over a period of twenty-four, or forty-eight to perhaps sixty months depending on the size of the overall loan that you've done for debt consolidation. Be mindful as a consumer not to go back into debt with the other credit cards that you originally paid off just because the balances have been brought back down to zero. So it's an important tool but there's a responsibility on you not to get back into new debt. This is Patrick Munro talking about how debt consolidation loans work.


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