Are you interested in debt consolidation? Do you believe it’s the perfect way to improve your financial circumstances? Are you familiar with the many ways of consolidating debt?
If debt consolidation is on your mind, there’s no better time than now to learn more about the benefits and how to take action. Once you have more information guiding you, it’s easier to decide where to start.
Here are the five top benefits of debt consolidation:
- Turn multiple payments into one: Would you rather manage one debt payment or several debt payments? Most people agree that the fewer debt payments they have, the easier it is to stay on track. With debt consolidation, you move your debt under the same umbrella.
- Lower interest rate: With debt spread across multiple accounts, you’re paying interest on multiple balances. But after you successfully consolidate your debt, you’re left with one balance and one interest rate.
- Less stress: Even though your balance is the same, you’ll feel more confident and less stressed once you eliminate some accounts.
- Pay off your debt sooner: For example, with a lower interest rate, you may be in a position to make extra principle payments each month. This will save you money and allow you to pay off your debt sooner.
- Boost your credit score: Even though debt consolidation doesn’t change how much you owe, it can still boost your credit score. This is the result of eliminating balances.
Now that you understand the benefits of debt consolidation, it’s time to turn your attention to the steps to make it happen. Here are some of the options to consider:
- Personal loan
- Home equity loan
- Balance transfer credit card
There are pros and cons of each approach, so carefully consider what would work best for you.
For example, if you’re dealing primarily with credit card debt, a balance transfer credit card makes sense.
Should you have a variety of debts, a personal loan or home equity loan is a better choice.
It’s your hope that you never find yourself in so much debt that consolidation comes to mind. But should this happen, you’re best off taking advantage of any strategy that’s available to you. This includes debt consolidation.
Do you have any experience with debt consolidation? What steps did you take to make this happen? Which benefits worked in your favor?