Debt consolidation is a great option for people who are struggling to manage multiple debts. People who benefit from debt consolidation are those who are paying back their debt at very high interest rates and not seeing any light at the end of the tunnel. Debt Consolidation also helps those who simply cannot afford their monthly minimum payments and are starting to fall behind. Debt consolidation gives consumers a way to simplify their bill paying process and replace multiple bills with just one simple monthly payment. This is typically a lower monthly payment then what they’d pay on their own. It’s also a great way to pay off your debt much faster and save a lot of money in finance charges. If you are considering a debt consolidation plan or simply managing your debts ask yourself the following questions: Is it better for me to pay back the money I have to borrow in one lump sum payment, or know that I can take time paying back the debt over time? Is it better for my budget if I pay back several different loans to different lenders or to keep a more regular one time monthly payment? How’s the credit card debt looking overall- high amounts at high interest rates? Is it to do a low interest rate to avoid high finance charges or do I risk financial trouble down the road if I build up or max our a single credit card?
Is Debt Consolidation for everyone ?
Debt consolidation isn’t for everyone, but it certainly helps many people who qualify. A great candidate for a debt consolidation program would be one with multiple debts ranging from credit cards, personal loans, medical bills, collection accounts and other unsecured debts. Another factor to consider is not only how many accounts you have, but also looking at where the interest rates are at. If your interest rates are over 15%, you’re simply paying too much in finance charges each month, which is a lot of wasted money that should be either going to a savings or retirement account or directly to the principal balance and not to the creditors. Look at how high your interest rates are. Lastly, are you struggling to make your minimum payments, have you already started to fall behind, or are you close to your limits? These are also very good indicators as to whether you’d qualify and benefit from a debt consolidation program. If you suffer from any of the previously mentioned debt headaches, contact a certified credit counselor who will help determine the best debt consolidation program for you.