Are you struggling to manage your debts? In order to avoid having to remember multiple payment deadlines, as well as having to battle high interest rates, it can be a smart idea to consolidate your debts into a single loan.
Advantages of Debt Consolidation
Consolidating debts can offer a number of advantages. Rather than having multiple monthly repayments, debt consolidation gives you one manageable monthly payment to meet. Additionally, if you have any high interest debts like credit card debts, you can roll these into a single, lower interest payment. This makes it much simpler to manage a single payment and interest rate, so you can focus on your debt payoff strategy. In general, a debt consolidation loan that has a longer repayment period will allow you to lower your monthly repayments, though you may pay more over the life of the loan.
Types of Debt Consolidation
There are two main options when it comes to traditional debt consolidation:
- Balance-transfer credit card. With a balance-transfer card, you transfer all of your debts into a low interest credit card and pay the balance as quickly as possible, usually during the promotional period;
- A fixed-rate debt consolidation loan. Once you receive the loan, you’ll use this money to pay off your debt. From there, you’ll pay back the loan through monthly repayments.