The average American has around $38,000 personal debt, excluding a home mortgage. If you’re struggling with debt, we can help.
Are you wondering what the benefits of debt consolidation are? Not to worry! In this guide, we’ll go over why you should consider consolidating your debt.
Want to learn more? Keep reading to find out.
1. Prepare for a Single Payment Instead of Many Payments
With debt consolidation, you can pay your debt off in a more straightforward manner. Don’t worry about managing many different debts.
Do you have a few credit card balances? Bring them together. You could end up paying smaller payments each month over a longer period.
2. You Could Get a Lower Interest Rate
Unsecured debt from credit cards tends to have a high-interest rate. Over time, the high-interest rate will add a significant amount to your debt.
Merge your debts into one source. With decent credit, you can secure a lower interest rate on your single account.
3. Improve Your Credit Score
Are you asking yourself the question, “Does debt consolidation affect your credit?” Yes, debt consolidation can affect your credit. You can boost your credit score when you reduce your credit utilization rate.
You can get this rate by figuring out how much you owe divided by your credit limit. If you have $10,000 in credit available on two cards and a balance of $5,000 on one of them, your credit utilization rate is 50 %. Try and keep credit utilization low.
Credit utilization will affect your credit score in a significant manner. It’s also better to have a larger balance on one credit, rather than a bunch of balances on a few cards.
4. Lower Your Stress
You will reduce your stress when you know you have one payment to make each month. Having an organized system to reduce your debt will help you stay on track.
Debt can lead to stress, but decide to take control of your finances. You will end up in a better financial position because you are taking active steps to get rid of the debt.
5. Pay Your Debt off Fast
Some people keep their credit card balances for years but never pay them all off. Credit cards earn interest, and lenders don’t mind how long people take.
With debt consolidation, you can figure out how to pay off your debt. Your advisor will consider factors like your income, credit score, and how much you owe.
With this information, you can figure out a reasonable length of the loan and create a payback plan. Debt consolidation loans will have a shorter payback period.
You can start getting rid of your debt today. Learn more about the top rated debt consolidation process.
Now You Know the Benefits of Debt Consolidation
We hope you found this guide on debt consolidation helpful. With these benefits of debt consolidation in mind, meet with a professional to make a plan.
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