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Their behavior hasn’t changed, so it’s extremely likely they will go right back into debt.
Let’s say you have ,000 in unsecured debt—think credit cards, car loans and medical bills.
The debt includes a two-year loan for ,000 at 12% and a four-year loan for ,000 at 10%.
Your monthly payment on the first loan is 7, and the payment on the second is 3. If you make monthly payments on them, you will be out of debt in 41 months and have paid a total of ,821.
But let’s be honest: Your interest rate isn’t the main problem. This specifically applies to consolidating debt through credit card balance transfers.
If that’s not bad enough, fraudulent debt settlement companies often tell customers to stop making payments on their debts and instead pay the company.
And now the total loan amount would jump to ,103.