Is Debt Consolidation a Good Idea?

Don’t let credit card debt become a load in your life. Paying off your debt with a low-interest debt consolidation loan is faster and easier than making minimum payments on credit cards.

Consolidation means that your different debts, whether they are loan payments or credit card bills, are rolled into 1 monthly payment. It may be a way to simplify or lower payments especially if you have multiple loans, consolidation or credit card accounts. 1 payment to 1 source, once a month.

The best way to make paying off your debt more manageable is debt consolidation. Instead of paying different minimum monthly payments on a number of bills, this process demands getting a new loan to merge and cover your other debts or loans. Consolidation combines multiple bills into a single debt that is paid off monthly through a consolidation loan or a debt management plan. This debt-relief option untangles the mess buyers face every month trying to keep up with numerous bills and numerous deadlines from numerous card companies.

There are several avenues open to consolidating debt, including a home equity loan, credit card balance transfer, borrowing from a savings/retirement account, debt management plan and personal loan. But debt consolidation works sufficiently when it involves high-interest debt, such as credit cards. The principal attraction to debt consolidation is that you will save money by paying a lower interest rate. Some debt, such as car loans, mortgages and medical bills already have no interest or a low-interest rate, there is no advantage attained in consolidating them.

The route you choose should be based on whether the solution offered fits your budget and time frame plus research. Your debt-to-income ratio and credit score are factors, if you choose to get any kind of consolidation loan. You may also choose to pursue online debt consolidation, to get more information, tools and solutions to get out, and stay out, of debt. Learn more

You probably wondering if you can qualify for a debt consolidation loan! Anybody with a good credit score could qualify for a debt consolidation loan. If you do not have a good one, the fees and interest rate related to the loan could make it cost more than paying off the debt on your own. There are various markers that tell you when debt consolidation is a great idea. Those markers include:

  • When you qualify for a 0% interest rate credit card
  • When you can reduce the interest rate on your deb
  • When you have a regular revenue that exceeds your monthly expenses
  • When the monthly payment is a reasonable part of your household budget
  • When those payments actually lower the balance owed each month, rather than just meeting the minimum amount required.
  • When you can pay off your consolidation loan or debt management plan in less than five years

Debt consolidation has a favorable impact on your credit score as long as you make on-time payments. If you choose a debt management program, your credit score will go down for a short period of time because you are requested to stop using credit cards. However, if you go with a debt consolidation loan, paying off all those debts with a new loan, should improve your score almost immediately. Making on-time payments on the loan will continue to improve your score over time.

If you want to step away from credit card dependence and be responsible with your money you need a plan. Debt consolidation is a plan.

Eventually, you can breathe again financially.

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