With all of U.S. household debts combined, Americans together owed a skyrocketing $13.21 trillion in 2018, hitting a record high. However, the amount of debt the average American might owe depends on their financial status, level of education, current employment, age, lifestyle, among other factors.
Regardless of how much you owe and why, getting out of debt is critical in order to take stress off your plate. Clearing debt also means getting to fix your credit score. And as most of us are aware, having an ideal credit score means getting a better chance for renting a home, getting lower interest rates on credit cards, and having a better shot at getting approved for a loan.
Getting out of debt is hard, but with debt consolidation, some might find that it’s a reliable solution. Debt consolidation is a type of debt refinancing. Via debt consolidation, all of your unsecured debts get rolled into a single loan. In fact, there are multiple reasons why one would consider debt consolidation for paying off their pre-existing debts, such as:
- Lower interest rate
With debt consolidation loans, you as the borrower will often get the benefit of receiving a loan that has a lower interest rate, that is, as long as your debt consolidation loan has a lower APR than your current loan. The intention of this is to allow the borrower to pay their dues quicker. Because debts can be paid faster, both the borrower and the lender can benefit in this case.
A lower interest rate means you are forking out less money every month as you pay back your loan. Apart from the short-term benefits, you’re also benefitting long-term as you’ll have overall had to pay back less to your lender interest-wise. As a result, a lower interest rate to pay back your debts can also indirectly help you save more money and better your finances overall.
- Only having to pay back in one payment
Apart from the money you have to pay back and the interest rates that are tied to it, what is the next most annoying thing about having debt? Having to pay your dues to multiple lenders through multiple payments. After all, many Americans have multiple credit cards. However, with debt consolidation, you’re simply paying to one lender via a single monthly payment.
Unless you like wasting your time and having to pay what you owe split up in several bills, paying off debt through a debt consolidation loan tends to be the more preferred option. It’s just easier, and quite frankly, it makes more sense to put all of your debts in one pool.
- A more convenient way to pay off debt
When we say debt consolidation allows debt holders a more convenient way to pay off their debt, we mean multiple things. For some individuals, a lower interest rate alone may be convenient for them on a financial level. However, debt consolidation is also convenient in terms of the latter point we discussed regarding only having to pay back in one payment.
Having to only pay back one lender with one payment on a monthly basis means less work for you. You’ll have one bill with one payment, making things much simpler and quicker on your end. Thus, there is no need to sift through multiple credit card bills to make several payments to different lenders when you opt for debt consolidation.
- More likely to pay back on time
There are multiple reasons why one is more likely to pay their debt on time when they opt for a debt consolidation loan. For one, only having one payment each month means no more having to juggle multiple loans. In turn, you’re more likely to pay your dues that month as you’ll no longer be forgetting to pay back one of your loans if you have too many currently on your plate.
Additionally, you are more likely to pay off your debt on time via a debt consolidation loan considering you will be better able to afford it out of pocket. Coming back to point one on our list, those with debt consolidation often get the benefit of lower interest rates. Therefore, there’s a higher chance that they will be able to afford what they owe when it’s due.
- Getting out of debt quicker
There are many reasons why it’s a good idea to get out of debt as quickly as possible. For one, having debt is stressful. Seeing the number build certainly doesn’t help. Additionally, the longer you have debt, the more money you will owe in interest. Also, having a large amount of debt long-term doesn’t make your credit score look too good, affecting the way creditors look at you.
Fortunately, opting for debt consolidation is one way you might be able to get out of debt sooner. With all of the latter benefits in mind, especially a lower interest rate, it makes perfect sense why debt consolidation can help you eliminate your outstanding patients much sooner than you expect. The faster you’re out of debt, the better you’ll reap financial benefits.
Regardless of the various benefits of debt consolidation, it’s vital that you do your own research to decide if this debt refinancing option might be something you want to try. For more information on debt consolidation, head to DebtConsolidationUSA.com.
Conclusion
Debt consolidation means getting to pay back your debt with a lower interest rate, having an easier way to get out of debt, and only having to pay back in one monthly payment as opposed to several. Other benefits of debt consolidation include being better able to remember to pay back on time and getting the opportunity to get out of debt faster.
With the latter said, debt consolidation may save you money short- and long-term and get you back on track to boost your credit score, overall helping you get your finances in order. After all, when one has good finances, they can enjoy an easier, less stressful life. Thus, getting out of debt may be the best thing you do.
