Pros and cons of consolidating bills

09-May-2020 06:34

If you want to consolidate your debt to reduce your interest charges or interest rate, then you need to do more than consolidate bills.On the other hand, you can consolidate your bills to streamline your finances and save time.How to know if consolidation loans make sense Before you rush off to your bank or credit union for a debt consolidation loan there are some things you need to know in order to understand whether it makes sense.The first of these is that the interest rate on your debt consolidation loan should be lower than the rates of the debts you’re consolidating.Finally, you need to be in a position to pay off that new debt as quickly as possible and make sure you don’t take on any other additional debt until you pay off the debts you consolidated.One of the problems with debt consolidation loans is that too many people consolidate their debts then get deeply in debt all over again because they’re just poor money managers and have spending problems.

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A third factor is that you don’t trade fixed-rate debt for variable-rate debt.

If you have three credit cards with interest rates of 22%, 20% and 18% your interest rate would be 20%.

If you were to transfer the balances on those three cards to a new one with an interest rate of 15% or get a debt consolidation bank loan at 10% and use it to pay off your credit cards, you would definitely improve your situation.

Credit counseling will lower your interest rates, likely lower your monthly payments, and speed up the time it takes you to get out debt.

If your biggest priority is getting out of debt then make sure to speak with a reputable debt settlement provider.

A third factor is that you don’t trade fixed-rate debt for variable-rate debt.If you have three credit cards with interest rates of 22%, 20% and 18% your interest rate would be 20%.If you were to transfer the balances on those three cards to a new one with an interest rate of 15% or get a debt consolidation bank loan at 10% and use it to pay off your credit cards, you would definitely improve your situation.Credit counseling will lower your interest rates, likely lower your monthly payments, and speed up the time it takes you to get out debt.If your biggest priority is getting out of debt then make sure to speak with a reputable debt settlement provider.If you can currently afford to make all your required monthly payments and have equity in your home, then look to consolidate debts with a cash-out loan or refinance.