Consumer debt in the U.S. is about $14 trillion. Are you burdened by a piece of that debt? Then it’s time to learn about the benefits of debt consolidation.
While having a small amount of debt isn’t bad, if you’re struggling to make ends meet due to debt, it’s time to find a solution. Debt consolidation lets you organize your debts & help you to get out of debt, so you’re not trying to remember and manage a bunch of different payments. It can sometimes even help you lock in a lower interest rate, so you can pay down debt faster.
How does debt consolidation work, and what are the potential benefits of debt consolidation? Read on to find out!
What Is Debt Consolidation?
Debt consolidation simply means merging all of your debts into a single account, with a single monthly payment. With fewer payments over the course of the month, you can more easily plan ahead and budget. This also helps reduce missed payments.
The best type of debt consolidation means moving your debts to an account with a lower interest rate, so your monthly payments go farther. Services like Debthunch can even help you find the best consolidation option for your situation.
The Benefits of Debt Consolidation
Now, let’s take a look at how debt consolidation can help you meet your financial goals.
Pay off Debt Faster
When you consolidate, you can move your debt to an account with a lower interest rate. The payback plan may be much more reasonable, so you can pay off your debt in a shorter time period. Consolidated debt loans generally have set payback periods, so you’ll know exactly how long it will take you to pay off.
Credit Score Boost
Sometimes, consolidating debt can actually raise your credit score. For example, you can use a consolidation loan for bad credit. This reduces your credit utilization rate, which can give your score a boost.
Easy Automatic Payments
Another one of the benefits of debt consolidation is the ease of making payments.
In addition to only having one monthly payment to remember, you can often set up an auto-pay system for your payments. This frees up your mind to focus on other aspects of your financial health. It also saves you time, so you have more free time to focus on other financial matters, like making a budget.
As you can imagine, this ease can also help lower your stress levels.
When you’re stressed, it’s often harder to think clearly and make wise decisions. This can make your financial problems even worse. With debt consolidation to remove some of your stress, you can tackle other financial issues with a clear mind.
Is Debt Consolidation Wise?
With these benefits of debt consolidation in mind, is debt consolidation a good choice for you?
For many people, the answer is yes. However, debt consolidation isn’t for everyone. For example, if you’re tempted to max out your credit cards, debt consolidation won’t help you fix the underlying issue.
Many credit card companies offer balance transfer cards that allow you to transfer credit card debt from other cards onto one balance transfer card. Doing so can sometimes get you a lower interest rate.
But if you feel that debt consolidation is right for you, don’t delay! The sooner you get started, the sooner you’ll see the benefits of debt consolidation in your own life. For more financial advice, check out our Wealth section often for the latest news!