According to USA Today, over one-third of Americans have trouble making their debt payments on time. From student loans and car loans to personal loans and credit card payments, the types of debt that we are juggling are varied and growing from year to year. While finding ways to pay off our debt, one thing many of us can benefit from is consolidating debt.
Consolidating debt does not necessarily mean calling one of those companies you see on television who sometimes hurt more than they help. One option is taking out a personal loan. You can do this through your bank or credit union. You can also check out online lenders like STK Finans that offer their services. Here are a few benefits of consolidating your debt:
- Less Accounts to Manage – As stated above, juggling various bills can be overwhelming and sometimes bills can fall through the cracks. Many times people try and get their bills lined up according to when they get paid, but it doesn’t always work out well, and unless you’re extremely organized, it can be a recipe for disaster. By consolidating some or all of your debt, you’ll be able to have fewer payments each month, and less stress when it comes to paying those bills.
- Lower Interest Rate – Credit card interest rates can vary, but on average they fall between 15 and 20%. Personal loans usually offer rates significantly lower than this – if your credit is in good shape. If you qualify for a good interest rate, it will mean that your collective monthly payment will be lower than higher interest lenders. Not only will your monthly payment be lower, but your overall total debt will be less with a lower interest rate.
- Getting Out of Debt Sooner – Another benefit of a lower interest rate is that you will pay off your debt significantly sooner than if your interest rate stayed higher without consolidation. You can even hasten your debt elimination by continuing to apply the difference in your monthly payment towards your debt!
Consolidating your debt is a great way to get ahead in your financial life. While this option allows you to better organize your finances while reducing stress, it is important to remember it is a tool to get yourself back on track. Many people make the mistake of prematurely feeling they are financially secure because of the emotional ‘lift’ a consolidation gives. The best way to take advantage of consolidating your debt is to avoid adding on any additional debt.