If you have a number of different debts on credit cards, store cards or other loans, you may find it challenging to juggle them all. A debt consolidation loan could be a simple way to reduce the stress of managing all these repayments.
When to think about consolidating debt
Often debt can get away from you. What was a small debt on one credit card, could become a debt on two credit cards. Add purchases made on store cards, another loan and before you know it, your finances could become a struggle to manage. You do have options though, and a debt consolidation loan could be one of them.
What is a debt consolidation loan?
With a debt consolidation loan, all your existing debts are brought together to form one new loan. It's a fresh start that will give you a clearer view of your financial situation.
How does debt consolidation work?
With only one loan to pay off, life becomes simpler. You'll no longer be making different payments to different places. Your won't be faced with different interest rates or different payment dates. You'll have one repayment amount on a monthly repayment date.
The benefits of debt consolidation
- Only one monthly repayment to remember
A single monthly repayment is easier to remember, helping you avoid expensive fees for missed payments or late charges.
- Potentially lower interest rates and account fees
Personal loans generally have lower interest rates than other credit options. With a debt consolidation loan, you might be paying a lower overall amount of interest and account fees, saving you money.
- Know when everything will be paid off
You get to choose the term of your loan. So, unlike a credit card, where you may make different payments over time, you know exactly when the loan will be paid off.
Next steps to consolidating debt
If you are considering a debt consolidation loan, first gather the statements of all the outstanding balances you have. Calculate what you owe and also check if you will have any fees to pay, such as fees for paying off another personal loan early. Remember to also check what fees your new loan may have.
It will be up to you to close any credit cards or store cards once they are paid off, so you can avoid any further charges.