Try our Debt Planner - Credit Card Calculator to see how much you can save with a consolidation loan.
Debt becomes unmanageable because of three things:
Especially with credit cards, multiple debt robs you of your time and money. You don't need to be in financial trouble to consider a debt consolidation loan, since saving money is smart policy no matter what. Here is how it works.
Consolidating means bringing various debts together. A debt consolidation loan is used to pay off all of the different debts immediately, replacing them with one loan arranged by debt consolidation lender. Then, that loan will have lower monthly payments and far better interest rates than credit cards. You only need to pay one bill a month, and no longer be harassed by three or four credit card companies or creditors.
But beware: The longer the loan, the higher the interest, even if the rate is lower. Read more here.
Lots. Credit card companies can charge interest rates from 12 to 19%. Credit card debt consolidation loans, on the other hand, are usually between five and 8%. For example, a $13,000 debt, over five years, can cost $5000 more in interest if not consolidated!
There are four main requirements to be eligible for debt consolidation loans. Let's look at each one:
It is important to know exactly how much this will cost. Sometimes, the interest rates that they can offer are not that much better than the combined average rates you are paying now.
Further, if they offer you a very low monthly payment, beware. Lower payments often mean that the term of the loan is longer. Even at a slightly lower interest rate, the longer the loan exists, the more interest you pay over time. Some consolidation loan offers can actually cost more than just paying off the credit cards directly.
Click here to run our Debt Planner - Credit Card Calculator and get a better idea about whether or not the consolidation loan offer is worth it.
Consolidation loans can be arranged online through many networks. This site is affiliated with these excellent services:
One application, and you will receive offers from multiple lenders. Great for consolidation loans.
An online lender specializing in debt relief loans to consolidate your debt.
A network of lenders with loans available for people with Fair or below credit scores.