Financial responsibilities can weigh you down as you try to pay your bills on time every month. One possible solution is to apply for a debt consolidation loan, a single loan that you can use to pay off all of your other debt, such as credit cards and auto loans. Here are three good reasons to consolidate your debt right now: 1) the convenience of one monthly payment, 2) a lower overall interest rate resulting in lower monthly payments and reduced interest expense, and 3) an improved credit score.
1) One Monthly Payment
Losing track of your bills and missing monthly payments can result in costly late fees, increasing the amount of your debt. A debt consolidation loan requires only one monthly payment to your lender, which can help you avoid incurring late payment fees and over the limit charges.
2) Favorable Interest Rates
When you make only the minimum monthly payment on your credit card, the majority goes toward the interest fees, prolonging the process of paying down your debt and increasing your interest expense. Fortunately, debt consolidation loans typically have lower interest rates than credit cards, which can save you significant money in the end. With mortgage and home equity interest rates near record lows, now is a great time to consider a debt consolidation loan.
3) Improved Credit Score
Your overall credit score is based primarily on factors such as the number of open accounts you have, your payment history, and the total amount of debt that you carry. Paying off your credit cards with a debt consolidation loan significantly reduces the amount of debt on your credit report and can eventually boost your credit score.
Imagine how good it will feel to pay off your entire credit card debt. With a debt consolidation loan, you will be improving your debt picture and saving money in the long run.