Natalia Chi
Getty Images/iStockphoto
Debt can take a toll on your economy (and your mental health). It can hurt your credit score, hinder your ability to save toward your goals, and cause you to have a very thin budget and have to take on more debt to make ends meet.
If you find yourself in this situation, debt consolidation loan It could be a lifesaver. Not only will it make your payments easier to manage, but it can also save you thousands of dollars now and in the future. This article explains how debt consolidation can save you money and why. best course of action If you are having trouble keeping up with debt.
Get a free savings estimate here and see how much you can save with a debt consolidation loan.
How Debt Consolidation Can Save You Thousands of Dollars
debt consolidation might be worth For many reasons. Here are some of the big ones.
falling interest rates
One of the biggest benefits of debt consolidation is the ability to lower interest rates. Currently, the average interest rate on credit cards is around 20% and the average interest rate on personal loans is around 11%. High interest rates make it difficult to pay off debt and can cost you thousands of dollars while paying it off.
Debt consolidation means that you will have to pay off all outstanding debts by borrowing new ones. This loan is usually offered at a lower interest rate than you have previously paid. Currently, you can get debt consolidation for 7% or less, depending on your situation. credit score.
How much can you save with this? Imagine he owes you $11,000 on your credit card (which, according to one study, is close to the current American borrower average). transunion report). If he wants to pay it off in five years, he will pay $6,485.96 in interest. However, consolidating that debt into a loan with an annual interest rate of 7% leaves him with only $2,068.79 in interest.
Request a free consultation today to see how debt consolidation can help.
Streamline payments
Debt consolidation solves multiple debts with monthly lump sum repayments. This simplifies budgeting and eliminates the confusion of tracking multiple due dates and interest rates that can lead to late payments, late fees, and over limit penalties.
Financial planning made easy
Debt consolidation makes it clear how much you owe and when you will pay it off. There are also fixed interest rates, although the annual interest rates on multiple balances can vary from month to month. So you can budget more accurately and always have the funds you need to pay.
And because you have to pay a fixed amount each month, you no longer have to pay only the minimum amount and extend your repayments indefinitely. You have to pay off your debt by a certain date, after which you can use the money you’ve been putting into it for other financial goals, such as building. emergency fund— This will help you avoid further debt build-up.
Improve your credit score
Helps by paying consolidated debt regularly and on time improve credit score. A higher score means you get better terms on everything from car loans to mortgages, saving you money down the road.
How much can you save with debt consolidation? Learn more about.
Conclusion
Managing multiple debts can be a daunting task, and high interest rates can lead to a vicious cycle that leads to further financial troubles. Debt consolidation can help reduce stress, lower interest rates, and ultimately save thousands of dollars in debt repayment costs.
However, debt consolidation is not a panacea. It’s important to understand your financial situation and create a budget to keep your payments in order. It’s also important to maintain a disciplined approach to money so that once you’ve paid off your debt, you don’t find yourself falling back to where you were. With the right approach, debt consolidation is the first step to regaining control of your finances and establishing long-term financial stability.
