Polk Partners is simply not the best way to consolidate debt. Polk Partners, Ladder Advisors, and Carina Advisors have recently been flooding the market with debt consolidation and personal loan offers in the mail. The problem is that the terms and conditions are at the very least confusing, and possibly even suspect. The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Polk Partners, also known as Ladder Advisors, Carina Advisors, Corey Advisors, Pennon Partners, First State Associates, Jayhawk Advisors, Clay Advisors, Colony Associates, and Pine Advisors, etc., for some time now.
Best 2020 Reviews has also been covering lending companies such as Credit9, Americor Funding, Fiona, LendingTree, Mobilend, Titan Consulting Group, Signature Preferred Financial Solutions, Golden Financial Services, and Pacific National Funding.
It’s extremely easy to end up with more debt than you can handle, especially if you’ve got the habit of financing all your purchases with a credit card (or multiple credit cards). For many people, it’s difficult to manage debt when it’s scattered across multiple credit cards.
This is where debt consolidation comes in. Debt consolidation helps you escape the financial chokehold without declaring bankruptcy. It is worth noting that the truth about debt consolidation is that it is not a magic bullet that solves all your debt problems in one go. No, it requires commitment, resolve, and most of, all self-discipline to stick to your budget.
If you’ve decided that debt consolidation is the way to go, you’ll have to devise a strategy. Start by figuring out how much it is that you owe and what sort of debt you’re dealing with. For instance, is it all credit card or do you also owe money on a car, personal loan, or house?
If it’s spread out over different categories, then the best way to consolidate debt is to first break it down into secured and unsecured debt. Secured debt is attached to your possessions. Failing to make payments on secured debt is a surefire way of losing your assets, this could be a house or a car.
Unsecured debt, which is primarily owed on credit cards, student loans, and personal loans, isn’t ‘secured’ against collateral, so there is nothing for the lender to take back. They can still sue and try to take your income if you default. One of the biggest downsides of unsecured debt is the high interest rate. Because there is no collateral to secure their loan, lenders will seek to reduce their risk by increasing the interest rates.
Below, we’ll discuss the best way to consolidate debt:
- Create a debt payment plan with the help of a nonprofit financial counseling organization
- Transfer all of the debt owed to one credit card and try negotiating a low interest rate if possible
- Take out a personal loan, which may be the best way to consolidate debt.
Your approach will depend on various factors such as your credit score. Most credit card companies will assign a FICO score to your finances, which allows them to determine if you can get a loan big enough to consolidate debt at a suitable interest rate.
It goes without saying that all these strategies require access to an income that can sufficiently cover your resulting monthly payments and other expenses. The problem once again is that if you miss out on a single payment, the debt strategy would start falling apart and the walls start closing in again. And if you used collateralized loan as a debt consolidation strategy, you may even face foreclosure.
1. Credit counseling agencies
A credit counseling agency is an organization that reviews your overall debt situation and gives you advice depending on how bad things are. If they feel the best way to pay off your debt requires debt consolidation, the counseling agency will coordinate with your lenders to create a debt management plan.
The counseling agency works with credit card companies to secure lower interest rates provided you can guarantee a payment every month. This payment is then distributed to card companies at the interest rate they agreed upon. And here’s the best part: counseling agencies won’t charge much (or none at all) for their services.
- Reduces your interest rate to reduce your monthly payment, making it the best way to consolidate credit debt in our opinion.
- Since this isn’t a new loan, you can always pay it off or decide to cancel the program at any time of your choosing. Do keep in mind that pulling out results in the loss of interest rates, late payments, and any other concessions you may have secured before.
- Debt management plans give you a period of three to five years to settle your credit card debt. They may buy you even more time for individual debts like student loans and personal loans.
- You won’t be flooded with phone calls from your debt collection agency anymore.
- The credit counselor gives useful advice on how not to fall into crippling debt once this is all behind you.
- There may be a monthly fee associated with your plan. This fee will be included in your payment plan.
- You will be required to close all your credit card accounts in the program. They may give you one
- Missing a single payment will almost always result in the lender cancelling the concession on the interest rates that were made when you first started the program.
- This will affect your credit score which will slump down a few points for the first few months of the debt management plan. But if you make your payments on time, the debt score will recover and may even improve.
2. Take Out a Personal Loan
Personal loans are often used by borrowers to consolidate credit card debt. Some experts argue that it is the best way to consolidate debt because it effectively turns multiple balances into a single monthly payment. These loans don’t require much collateral and are available through credit unions, a variety of online lenders, and even bans.
Personal loans are often used by people with less than stellar credit scores to secure lower interest rates and rolling up multiple payments into a single monthly payment.
- The interest rate on credit cards varies. The interest rate on personal loans is fixed. This makes it easier to plan.
- Personal loan debt is unsecured, which means creditors won’t seize your assets if you default.
- If you have a good credit score, you can secure a much lower interest rate than on your credit cards.
- Personal loans may require high credit scores
- High origination fees for personal loans (which will add up to your debt)
- Do not use your credit card to finance your purchases because things will get worse
3. Using Credit Card Balance Transfers
Most credit card companies offer balance transfer requests to existing customers and new customers alike. They may offer a zero-interest period to incentivize the use of their services. The only catch is that you must pay off your debt before the grace period ends, which is usually 12 to 18 months. Failing to do this means returning back to high interest.
By far the biggest advantage of credit card balance transfers is that you won’t have to deal with an interest rate during the grace period. This allows you to focus purely on your principal payment.