Your monthly credit card payments are killing you, and you’re barely making them, to boot. You also want to find a way to slash your interest rate.
Can debt consolidation help? Yes, it quite often can.
Here’s when consolidation is a good idea.
You Can’t Handle Your Monthly Payments
If you’re barely making your payment each month, all it takes is one unexpected but necessary expense to put you in a difficult spot an cause you to miss a payment. A debt consolidation loan, however, would permit you to continue paying off your debt but for less each month.
Let’s take Vicki, for example. She owed $21,000 on four credit cards and was making minimum payments 0f $750. Then her rent increased, and she had to find a way to save $200 monthly. She took out a $21,000 consolidation loan and refinanced all her debt. Her loan terms were 60 months with an 18% APR, meaning her monthly payment dropped to $533.26. That $216.74 in savings allowed her to pay off her cards and afford rent – with a few bucks to spare.
Check out this debt consolidation calculator to learn how much debt consolidation could save you.
You’re Having Problems with Timely Payments
There are many reasons some folks have trouble making their payments on time. Take Shameka, who relocated for a new gig and frets that her loan statements won’t get routed to her new crib in time, rendering her payments late.
Or, consider April and Calvin, who have separate bank accounts and must co-mingle cash to make on-time payments. If they were making a single monthly payment – which debt consolidation provides – their life would be simpler.
Then there’s Richard who travels constantly for work and sometimes misses a payment due to his hectic lifestyle.
The bottom line is that keeping track of myriad due dates can be frustrating and confusing. Debt consolidation is a good idea here because you only have one monthly outlay to remember.
Your Debt Has Overwhelmed You
A $50 purchase here and there, and the next thing you know, you’re being smothered by debt. Toss in a pricey car repair, and suddenly your finances are whack. Those pesky high-interest credit cards are keeping your balances essentially whole – even though you’re making minimum payments.
With a debt consolidation loan, if you make on-time payments your balance will keep decreasing and be eliminated within a set timeframe.
You Need to Save on Interest
You can save funds on interest when your loan is refinanced at a better rate. But you do need good credit. Take James, for example, who broke his leg but had no insurance. His hospital bills came to $5,000, and he wound up taking out a high-interest hospital loan. James soon realized that with a personal loan, he could erase his medical debt and one of his credit cards. Because he had good credit, he got a more favorable interest rate.
If you have multiple debts with high interest rates, consolidating them into a personal loan could help you save on interest every month.
You Can’t Pay Down Balances Quickly
If you’re just making minimum payments, it could take you forever to pay credit card off. That’s because most of your payments are going toward interest – not the principal. A debt consolidation loan allows you to clear multiple high-interest debts simultaneously.
Now you know when debt consolidation is a good idea. If it’s a good fit for you, get going on the strategy today. Haven’t you waited long enough?