Multiple debts lead to multiple accounts, interest rates, and payment due dates. Managing multiple debts can be difficult enough without the added stress of late or missed payments. If you feel like you’re drowning in debt, it may be time to consider debt consolidation.
With debt consolidation, you may be able to reduce or completely eliminate multiple debts. Check out these four signs that it is time to consolidate your debt and start taking control of your finances.
How Does Debt Consolidation Work?
Debt consolidation helps you consolidate multiple payments into one single payment. This can be achieved in a couple of different ways. The two most common ways are by opening a new credit card account or working with a professional debt relief company to consolidate debt.
There are many credit card options that have an introductory 0% interest rate for a balance transfer on new accounts. That means you transfer the debt from your existing credit cards onto the new card and pay nothing in interest for a short period of time. A debt consolidation loan is a personal loan that uses loan funds to pay off your existing debts so you can focus only on paying off the new loan.
It’s important that your new card or loan offers a lower interest rate, reduced payment amount, or some other benefit that makes managing and paying your debt easier. If it doesn’t offer any incentives, you may end up paying more than before you consolidated.
Opening a new credit account like a credit card or debt consolidation loan, however, requires you to open and manage your accounts on your own. If you’re already struggling with making payments on time or managing your debt, a new account may also be difficult to manage. On the other hand, you can work with a debt relief company to negotiate with your creditors on your behalf to lower your payments. You may even be able to settle your debts for less than you originally owed.
1. You’re Ready to Make a Financial Commitment
Debt consolidation is an excellent debt relief option if you’re in a position to make a financial commitment to paying down your debt. You’ll need to have a steady income that’s high enough to cover your monthly payment in order to make a debt consolidation plan successful. It may also be wise to commit to not taking on new debts during the period you’re paying off your consolidated debts.
Debt consolidation usually lasts about 1-5 years, depending on your consolidation plan. If you use a balance transfer on credit card debt, you will usually only have 12 to 18 months of 0% interest on the new card. Once the introductory offer expires, you’ll be back to paying the large interest rates charged by credit card companies.
If you choose a debt consolidation loan, your total debt may be stretched out over a longer period of time. However, depending on your new loan terms, you may have a higher monthly payment in order to reduce interest.
The best option is usually to enter a debt settlement program with a debt relief company. A debt relief company can negotiate with your creditors for you. The Certified Debt Specialists are available to help you stay on track and build a debt relief plan for you to resolve your debts.
Being mentally able to commit a part of your paycheck to pay off your debts and resisting the urge to take out new debts are signs it is time to consolidate your debt. Perhaps the most difficult part of debt consolidation is having the discipline to create and follow a budget that focuses on paying off your debt. The reward for this determination is usually reduced or eliminated debt, so it’s definitely worth making sacrifices for a few months or years.
2. You Want to Make Managing Debt Payments Easier
Managing several different debt accounts, such as credit cards, medical bills, and personal loans, can be overwhelming. Between having to remember different usernames and passwords for each debt as well as different due dates, it can be easy to miss a payment. Late or missed payments on debt can quickly send your credit score tumbling, further upsetting your financial situation.
With debt consolidation, your multiple accounts, cards, and loans are brought together under one new account. You’ll only have to remember one login, one due date, and one payment amount. Simplifying your debt makes it much easier to manage. You’ll be less likely to miss a payment and more likely to continuously make your payments on time.
3. You Might Be Qualified for Better Terms
Having multiple debts doesn’t
always mean you have a poor credit score. If you make your minimum monthly
payments, you may have retained a fairly good credit score even as your debt
has risen. This good credit can help you consolidate your debt.
Some debt consolidation programs work by opening a new account or taking out a new loan. You’ll likely need to have good credit to be able to qualify for credit cards with 0% introductory offers or good terms on a new loan.
However, you may not have the best credit, and that’s okay. Working with a debt relief company gives you a better chance of finding the right debt consolidation solution. Even if you have good credit, you may want to work with a debt relief company to settle your debts for less than you owe.
4. You’re Feeling Overwhelmed by Debt
When you’re facing multiple debts, and possibly collection calls or other notices to remind you of your debt, it’s easy to feel like you’re under a mountain of debt. By combining all of your debt into one place, you make it easier to start tackling it.
Additionally, debt consolidation has the benefit of a definite end date. If you’re willing to make the financial push to reach that end date, you may be able to eliminate the debts you consolidated. Having an end date to your introductory period, the final payment to your debt consolidation loan, or making a lump sum payment or final payment on your settled debt amount is like having a light at the end of a tunnel.
Finding a Debt Consolidation Program That Works for You
If you related to any or all of these signs it is time to consolidate your debt, you can get started today. Working with a trustworthy debt relief company like Accredited Debt Relief gives you access to Certified Debt Specialists who can help you create a debt consolidation plan. Find out more about debt consolidation today to see if it’s the right choice for you.