Debt consolidation can be described as a simplified debt relief plan wherein your monthly payments are combined into one. When minimum payments seem to do very little to slash your debt, debt consolidation is a good option. The notion of one easy payment and the possibility of lower interest rates are appealing factors of debt consolidation. Let’s look at this financial option and five ways that you can use debt consolidation to your advantage.
- One Payment
Rather than several payments for different debts, when consolidating debt, one loan is acquired to pay off all of your other accounts. Whether you have multiple credit cards and accounts with balances on each of them, all those accounts will be consolidated into just one source with a single lender and one regularly scheduled monthly payment. This will eliminate the worry about paying multiple debts for different accounts.
- Reduce Your Stress
Having debt can cause unwanted stress that can disrupt your life. Debt consolidation can alleviate the pressure, anxiety and stress that comes with not having a handle on your debts. Having only one account that you need to settle can drastically diminish your worry and make your financial life much smoother, and may improve your overall well-being by making you a happier, more worry-free individual. You could focus your energy elsewhere, or on more important things that could really use your attention. You’ll have relative peace of mind.
- End Collection Calls
You owe money to a business entity, you best be sure that they want that debt settled. It is common to fall behind on payments when you have significant debt, and a collection agency may seek to collect the debt owed, on behalf of the creditor or lender. Constant collection calls can seem harassing since you can get several calls in a day, but with debt consolidation, you can eliminate that annoyance and pay off outstanding balances.
- Reduce Interest Rate
Credit card debt, for example, can carry high interest rates. One of the advantages of debt consolidation is that you’ll be able to reduce your interest rate. This saves you money because you don’t have multiple interest rates for different debts to deal with anymore when you consolidate. This is great if you have credit cards that are maxed out, since you’ll likely get a cheaper interest rate with debt consolidation.
- Elevate Credit Score
With debt and overdue payments on your accounts comes a hit on your credit score. You can cause significant damage to your credit score and credit history if you continually make late payments on your accounts. You can use debt consolidation to rebuild your credit if you keep up with your payments and eliminate your debt over a period of time.
Debt consolidation may be just what you need to get your debt under control. You can use it to your advantage to reduce your interest rate, eliminate stress from your life, improve your credit score, stop collection calls and have only one payment source for all your accounts. You should know that debt consolidation is a financial option that can be beneficial to you.