Here’s How Debt Consolidation Can Help Accelerate Your Payment Goals



Despite the pandemic, Americans are working hard to pay off their debts. Here’s how you can use this consolidation to get ahead of yours. (iStock)

Despite the financial crisis caused by the coronavirus pandemic, Americans are taking responsibility for their debts and working to pay them back. According to Recent report According to the credit bureau TransUnion, from March to April of this year, the average balance on a consumer credit card fell from $ 5,893 to $ 5,369. In addition, the aggregate excess payment (AEP) for personal loans increased from $ 194 to $ 215 over the same time period.

Interestingly, although these two types of debt cannot be refinanced in the same way as mortgage or student loan debt, borrowers interested in working towards these financial goals still have a similar option. This option is known as debt consolidation. Below you will find a guide to the two most common debt consolidation methods.

What is Debt Consolidation?

Before delving into the specifics of your debt consolidation options, it is important to understand how debt consolidation works. Basically, this practice includes multiple credit cards or loan balances and combining them into one. However, according to financial experts, the move could also make it easier to pay off debts.

“Because you are consolidating your debts into one loan, you will simplify your monthly bills into one payment,” explains Leslie H. Tyne, Esq., Founder and director of Tayne Law Group, PC in New York, NY. “It will help you manage your accounts more efficiently and help you avoid missing or missing payments.”

You can visit Credible for the best loan rates and decide what debt it makes sense to pay.


How to consolidate your debt

Now that you are more familiar with what the debt consolidation process involves, the next step is to learn how to make it work for you. With this in mind, below are the two most common debt consolidation methods.

Obtaining a loan for debt consolidation

Your first option is to take out a debt consolidation loan. As the name suggests, you should use this type of personal loan to pay off all existing balances and consolidate debt in one place. Debt consolidation loans usually have a fixed interest rate, which means that you will have a guarantee of stable monthly payments and an accurate knowledge of when you will be able to pay off your debt in full.

As an added bonus, Tyne says that personal loans usually have a lower interest rate than a credit card. This means that if you continue to make payments of the same size after you have consolidated your debt, you will be able to pay off the debt faster because a larger percentage of your payment will go to your main balance.

If you think that such a loan might be the best choice for you, Visit an online marketplace such as Credible to view debt consolidation loan options.


Receiving a credit card with balance transfer

Another variant – open a credit card to transfer the balance… As with a personal loan, a balance transfer card allows you to transfer your existing credit card debt to one card. These cards usually also come with a starting offer of 0% per annum, which means you most likely won’t have to pay interest on the outstanding debt over a period of time.

However, keep in mind that a balance transfer card can also have a variable interest rate. If you do not pay off your balance in full before end of introductory period 0% per annumYou may end up paying more interest in the long run.

In addition, it is important to note that balance transfer cards are usually only available to those with excellent credit rating… You will want to take your FICO rating and credit history into account before applying for one of these cards.

If you think you can be a good candidate for it, Credible can help you. find a suitable balance transfer card for you.

Pros and Cons of Balance Transfer Credit Cards

The essence

As long as you can refinance student loans and refinance mortgage debt where personal loans and credit cards worried. the process works a little differently. In this case, if you want to refinance debt as part of your personal financial goals, you should look into one of the above two methods of debt consolidation.

However, Thane says, getting out of debt and getting out of debt also means changing your spending habits.

“To make the most of the benefits of debt consolidation, it is best to avoid increasing debt elsewhere,” she advises. “Debt consolidation does not prevent you from withdrawing funds from other credit cards or borrowing other loans, which can slow down the repayment process.”

Find out which personal loan rates you are eligible for today to see if this makes sense to you.



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