- March 15, 2017
- Posted by: Alyssa Plumb
- Category: News
Consolidate debt? Tips to follow
If you are feeling overwhelmed or crushed by the amount of debt you have, you are not alone. The average consumer holding a credit card owes nearly $17,000 in debt and pays nearly $1,300 a year in interest on that debt. And even if you pay the minimum payments on your credit cards every month, it barely covers the interest you owe, which means you could pay forever and still never pay off the debt. However, if you consolidate your debt onto a personal loan, you can save money on interest and actually end up paying off all your debt.
Transfer credit and close accounts
With personal loan interest rates often lower than credit card interest rates, you are much better off transferring your debt to a personal loan. Make sure you get a personal loan for the total amount of debt you owe on your credit cards, and you can pay them all off with the loan.
Once you have paid off all the debt with your personal loan, you will end up with one monthly payment to one person instead of dealing with multiple payments to multiple companies. The amount you owe monthly will actually go to paying off the loan instead of all to interest like your credit card minimum payments might.
The most important part of doing this is that you then close your credit card accounts. Until you can get a good handle on your finances, having a credit card is just too hard. Stay away from any other forms of debt unless absolutely necessary until you have paid off your personal loan and are in the clear again.
Figure out how much you need
Don’t borrow any more money than you absolutely need. You need to figure out what debts you want to put into your personal loan. Most people consolidating debt are trying to pay off their credit cards, but you might also need to pay off other loans you’ve gotten over the years including student loans. Remember the main purpose of consolidating your debt is to give yourself one monthly payment that is consistent and will pay off your debt. Since getting out of debt is your goal, you shouldn’t borrow more than you need. When you look at the loan, you will see the total payoff amount as well as what is currently remaining in the loan. Make sure you look for the payoff quote or you can request a payoff quote from the lender. This will tell you exactly how much money is needed to pay off the loan.
After you have gathered all the payoff quotes, you should add it up and apply online for exactly how much money you need to pay everything off. Don’t ask for more money because you have to pay interest on the extra cash.
Just apply online and you can have your personal loan to consolidate debt as early as the next business day.