Being in debt is common, but that doesn’t make it any less stressful. If your debt is becoming overwhelming, you might be asking yourself, “Is debt consolidation for me?”
When you consolidate debt, you use one loan to pay off your other debts. For example, if you have multiple credit cards, you can pay them off with your loan money, leaving you with just one loan. Paying one lender is a lot easier to manage than multiple debts.
There are many benefits to debt consolidation, but it isn’t right for everyone. Here are a few ways you can tell if debt consolidation is right for you.
1. You’re finding your debts difficult to manage.
Debt consolidation could be right for you if you are having difficulty managing multiple accounts. Are you missing credit card payments? Are you overdrafting because you can’t keep track of debt payments? Do you find it annoying to have to log into multiple accounts to manage your debt?
With debt consolidation, you only have to manage one loan. That’s one account to manage, which makes it a lot easier to keep track of when payments are due or when funds will be taken from your account. It also makes it easier to strategize on debt payoff, so you can become debt-free faster.
2. You don’t want to pay more interest.
Credit cards have variable interest rates, which means the rate can go up at any time. Personal loans have fixed interest rates, so you will know exactly how much you’ll owe in interest and what your payments are each month until you pay off your loan. If you pay off your debt faster due to debt consolidation, you’ll also reduce what you’re spending on interest.
3. You don’t plan to charge up your credit cards.
Overspending on your credit cards may be what got you into this mess in the first place. Debt consolidation should not be used to free up space on your credit cards so you can continue to spend on them. Take a look at the spending habits and behaviors that led to your debt and make changes or create a budget to avoid getting into the same situation.
4. Your credit is in decent shape.
Debt consolidation might not be for you if you have bad credit. Whether you’re looking to consolidate your debt with a balance transfer credit card or personal loan, your credit score will determine your interest rate. If you have bad credit, the rate you receive may not save you money. However, if your credit is in decent shape, you could earn an interest rate on a personal loan that will help you manage your debt more effectively.
Is debt consolidation right for me? If you are falling behind on payments or finding it difficult to keep up with your debts, debt consolidation could be the right option for you. A personal loan for debt consolidation can help you repay your debt faster, saving you money on interest. They also come with fixed interest rates, so you don’t have to worry about the interest going up while you’re paying off your debt.
If you do consolidate your debt, don’t get tempted to charge up your credit cards again once you pay off the balance. Lastly, your credit should be in good shape to make consolidating your debt worth it.
If you are considering debt consolidation, a personal loan from Uprova could be right for you. Check your rate online for free today.