Debt consolidation can be an effective strategy for helping you get debt free. A debt consolidation loan can allow you to pay off multiple credit cards in exchange for a loan that better fits your monthly budget and often has a lower interest rate than your credit card debts. Deciding when to consolidate debt can be affected by a variety of factors. Here are 5 reasons to consider a debt consolidation loan to help you become debt-free.
- Pay less in interest
Credit card debt is more expensive than the money you owe. That’s because it’s an unsecured debt so the credit card companies charge higher interest rates than other forms of debt. So, as you’re thinking about when to consolidate debt, you should take a close look at the interest rates on your credit cards.
In some cases, credit cards can have interest rates as high as 29% APR. When you consider a debt consolidation loan that has a significantly lower interest rate you’ll realize how much less you’ll be paying in interest over the life of the debt. So you can save money and be debt-free sooner than you thought possible.
- Lower your monthly payment
While a lower interest rate can save you money over the long term, lowering your monthly payment can help you have more flexibility with your monthly budget and let you have better control of your financial future. Some lenders will allow you to customize the amount you borrow, the rate and the term of your loan. A debt consolidation loan with a longer term typically offers lower monthly payments. The extra money you have each month can be used for other goals like a vacation, down payment for a home, or saving more for retirement.
- Become debt-free sooner
A debt consolidation loan can help you focus your efforts to become debt-free faster. If you’re making minimum payments on your credit cards, you could continue to do it for years to come. A loan will provide you with a realistic plan and timetable for when you’ll be debt-free as you save money on the interest payments! By replacing your unsecured debt with a debt consolidation loan, you’ll only have a single payment to make each month.
- You cannot afford your current debt load
When you’re making payments to several different credit cards each month, it can become very difficult to manage your monthly budget even if you’re just paying the minimums. That makes it challenging to afford your current debt load month after month. When that happens, getting a debt consolidation loan can mean the difference between solving your financial problems and taking control of your financial future, or falling deeper into debt.
- Avoid fees from creditors
Some credit cards will charge you regular fees, such as an annual fee, or a late payment fee. Those fees cost you extra money. And it’s probably not money you really want to spend on your credit cards. You might save money in the long run when you replace your credit card debts with a debt consolidation loan.
If these reasons are familiar to you, when to consolidate debt may be right now.
Contact the debt relief experts at LendingMarket. Our extensive network of lenders can help you find the debt consolidation loan that fits your needs and your budget. We’re ready to help you get control of your unsecured debt.