On average, Americans have about $38,000 in personal debts.
This is undoubtedly a large sum. However, if you manage it properly, there is no reason for your debt to become a problem.
One technique that has become more and more popular in recent times is debt consolidation.
If you find yourself asking “should I consider debt consolidation?” read on to find out what you need to know.
What Is Debt Consolidation?
Essentially, it involves rolling all of your different debts into a single debt. If you owe money on a couple of credit cards and a student loan, you can consolidate these into one payment.
You might do this by transferring all your debts onto a single credit card, or by taking out a debt consolidation loan.
Ideally, this payment will be lower-interest than your existing debts.
Should I Consider Debt Consolidation?
There are a number of situations in which debt consolidation is a good idea. If you have a number of different debts to pay each month which do not add up to a huge amount of money overall, debt consolidation may be a suitable option for you.
Advantages of Debt Consolidation
You may be wondering whether debt consolidation is worth the time you will put into arranging it. There are a number of reasons why it might be.
Convenience is probably the reason why most people choose to consolidate their debts.
If you pay debts to a number of different creditors each month, you are dealing with numerous separate payments, to separate places, at different times of the month, for different amounts.
This is simply a lot more work than the single payment structure offered by debt consolidation. It also makes it harder to budget accurately from one week to the next.
If you have a lot of debts outstanding for a long period, it can start to weigh heavily on your credit score. This can have serious ramifications for your ability to secure credit later on in life, especially if you haven’t taken out a mortgage yet.
Debt consolidation solves this problem, at least temporarily.
Savings on Interest
This is another reason why many people opt for debt consolidation, especially those with debt on a number of different credit cards. Credit cards have extremely high interest rates in comparison to other debt instruments.
By consolidating your debts, you can begin to pay off your debt far more cheaply.
A Smart Solution to Your Debt Problems
So, if you’re one of the people asking “should I consider debt consolidation?” you should be a little closer to your answer.
Debt consolidation won’t make your debts go away, but it has a lot of advantages for those struggling with debts. If you’re looking for an alternative to your current situation, you should give consolidation some serious thought.
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