As a result, they continue adding to their debt load instead of reducing it.
Debt consolidation loans allow borrowers to roll multiple old debts into a single new one, ideally at a lower interest rate.
If they’re able to qualify for a card with a lower rate (or in some cases a limited time, 0% promotional rate), the opportunity to save money on interest is huge.
Credit card debt consolidation – This means paying off several different credit cards with one single loan or credit card; you’re literally consolidating several debts into one.
A debt consolidation loan is a good strategy if you: In this article, you can read about: Nerd Wallet’s top lenders for debt consolidation How to compare debt consolidation lenders How to consolidate debt successfully If your credit is good, you can apply for a 0% interest credit card and transfer your existing balances to it, which could save you money.
However, a balance transfer card requires discipline to pay it off before the promotional rate expires, usually no more than 21 months.
By understanding how consolidating your debt benefits you, you'll be in a better position to decide if it is the right option for you.Consolidating multiple credit accounts into one new loan with a single payment may help you lower your overall monthly expenses, increase your cash flow, and eliminate the stress of multiple monthly payments.When you're choosing the term of a loan, consider the total amount of interest and fees you’ll pay.You’ll also have to avoid the temptation of making further charges during that time. Fixed payments ensure that you’ll pay off debt on a set schedule.If you’re in the dark about certain personal finance terms, don’t worry – you’re not alone!If you’re thinking of consolidating credit card debt and you need an expert opinion to make sure it’s the right choice for you, we can help.