5 Reasons to Consider Debt Consolidation
Debt consolidation is a good way to convert your existing credit card debt into a single, easy to manage loan. Many people who consider this option, however, really wonder if they need to go through with debt consolidation. If you’re trying to decide if you should pursue debt consolidation, ask yourself if any of the following characteristics describe you.
1. You can’t make your minimum debt payments. If you just don’t have enough money to cover the minimum due amount on your bills, you have to get into debt consolidation right away. The longer you let the problem go, the more you’ll owe in late fees, and your credit will only get worse. Debt consolidation can lower the minimum you have to pay every month, giving you a payment that will fit into your budget.
2. You’re not making any progress on your debt. If you pay your bills every month, only to discover that your loan balances are barely shrinking (or worse, getting larger) then you need to take steps to reduce the amount that you owe. Through debt consolidation, you might be able to lower your balances, but you’ll definitely be able to get a payment that will allow you to pay extra on the principal. That means you’ll actually see progress every month on your debt.
3. You can’t save any money because of your debt. If you can pay your bills, but you don’t have any money left over at the end of the month, then you need to take steps to reduce your loan payments. By paying less towards your debts, you’ll have money left over that you can use to build up a rainy day fund or just save for a major purchase.
4. Your interest rates are sky high. If you have double digit interest rates on any loan, you have to take steps to pay less. High interest rates mean that most of the money you pay every month goes to the bank, not towards getting you out of debt.
5. You don’t know when you’ll be done paying off your debts. If you don’t have a plan for getting out of debt, then you can quickly lose your motivation to work towards paying it off. Fortunately, debt consolidation loans come with a definite end date, allowing you to know the exact day that you’ll be done with your debt.
Debt Consolidation is a good way to convert your existing credit card debt into a single, easy to manage loan. Many people who consider this option, however, really wonder if they need to go consolidation, ask yourself if any of the following