Credit consolidation services can help save you money and simplify your financial life, but there are also things to consider before using them. When evaluating credit consolidation services, make sure that you understand the fees, interest rates, and repayment schedule so that you can get the most out of your investment in credit consolidation services.
Why Consolidate Your Debt?
Consolidating your debts into one lump sum helps if you’re having trouble keeping up with monthly payments. Your credit score might also improve, making it easier to get new loans. But what does debt consolidation really mean? And how do credit consolidators work? Before signing on with a company that offers debt-consolidation services, read on for some answers to these common questions about credit consolidators.
3 Ways to Consolidate Debt
Personal loans, credit cards and home equity loans are among your options. Getting a personal loan or using a home equity loan to consolidate your debt is an option that may be right for you if you don’t want to refinance your mortgage. A personal loan consolidates multiple debts into one lower monthly payment, but it has interest rates close to credit card rates and repayment terms of up to 10 years. Home equity loans typically have lower interest rates than personal loans but carry additional costs such as points and origination fees, plus longer repayment terms up to 30 years. If neither of these appeal, consider consolidating with a credit card balance transfer or taking out a cash-back card and paying off your debt with free cash rewards.
Pick The Right Company For You
Credit consolidation companies often have a lot of things to offer their customers, such as low-interest rates and monthly payment plans. You need to make sure that you pick a company that is going to be able to meet your specific needs, though. For example, do they charge hefty fees? Will it take too long for your debt to be paid off? What is their customer service like? Make sure these details match up with what’s important for you. Overall, when choosing which credit card consolidating company is right for you, consider how much effort and time you want to put into taking care of everything versus letting someone else take over all of your payments and consolidating everything for you.
Benefits of Credit Consolidation services
Paying off multiple high-interest credit cards with a single low-interest loan not only saves you from shelling out large sums of cash on interest and finance charges, but it’s also easier to manage one payment than multiple. Consolidating your debt into one easy payment allows for greater organization and less stress over your finances. Additionally, credit card companies are known to be among some of the most expensive institutions when it comes to borrowing capital. When you consolidate your credit card debt into a loan with better terms, like lower interest or fixed monthly payments instead of fluctuating interest rates, you’ll save yourself serious money in interest charges down the road.
What does it cost?
Credit consolidation is a process that allows you to pay off all of your credit cards using one lump sum. Because interest rates on credit cards are so high, credit card companies love to offer big sign-up bonuses and low monthly payments. If you have no chance of paying off your credit card in full, these low payments are not a good deal. Credit card companies often charge as much as 25% interest on your balance; meanwhile, personal loans and mortgages usually charge less than 5%. Since higher interest rates apply for longer periods of time with each loan, it usually makes sense to pay off high-interest debt first before going into a lower-interest debt cycle.
Conclusion
By consolidating your bills into one easy payment, you’ll cut down on late fees and finance charges that could be racking up each month. If debt is holding you back from realizing your dreams of a home, a car or a great lifestyle, it’s time to do something about it. Start by browsing through companies like Consolidated Credit and see what kind of savings they can offer you!