Debt consolidation loans offer the opportunity to combine multiple debts into one manageable loan. Many consumers with credit card debt seek out debt consolidation loans to save money and reduce their monthly payments. By consolidating debt it is possible to negotiate lower interest rates from your lender.
Today there are hundreds of debt management companies available in your community and online to help you get debt relief. Before deciding to consolidate credit card debt consider the options available to you. Each type of debt consolidation loan will be more effective in certain financial situations as opposed to others.
Debt Consolidation Benefits
The benefits of consolidation loans out weight the risks by far. For many consumers consolidating debt is their only hope to eliminate credit card balances and become financially stable. Consolidating credit cards and personal loans into a new loan gives the consumer more options and financial benefits.
Lower Interest Rates
The primary enemy of consumers with credit card debt is high interest rates. Typically ranging between 12 and 24 percent credit card interest rates can make it impossible to pay off a large balance within a reasonable amount of time. In fact, for those only able to pay the minimum payment each month it could take almost 30 years to pay off a balance of $10,000 or more.
Debt consolidation loans offer much lower interest rates than can be found with credit cards. A competitive lender can usually secure a loan at an interest rate around half of what a standard credit card charges. With lower interest payments it becomes easier to pay off credit card debt and can save money in the long run.
Reduced Monthly Payments
For those struggling to make the minimum payments on their credit card a personal loan can help ease this burden. With a lower interest rate and restructured payment plan consumers can pay less each month while making progress towards a debt free life.
Most people would agree that with lower monthly credit card payments they would be able to better manage their finances and make larger contributions toward paying down their debt. Consolidation loans can hep reduce the monthly financial burden and better organize credit card and personal debt.
Extended Payment Period
While working with a debt management company or a local bank consumers have the option to extend their repayment period over a longer period of time. This is a benefit for those struggling to pay the minimum payment each month. The extended payment period will spread payments out and reduce their monthly payment.
The extended payment period offered by consolidating debt can give consumers the extra time to overcome a financial crisis and intelligently manage debt. During difficult economic times it can be almost impossible to increase income and conquer those looming financial obligations. Debt counseling can provide the opportunity to extend the loan and bring monthly payments down to a reasonable amount.
Next Steps towards Debt Consolidation
The advantages of consolidation loans are numerous. Understanding the risk and responsibility of a new loan should be taken into account as well. Developing an intelligent financial plan and leveraging the benefits of debt consolidation loans are the keys to financial success.
While the number of Americans in debt continues to increase there are few who are taking the time and energy to make smart financial decisions. Credit card consolidation may be the first step in the right direction for anyone struggling to make their minimum monthly payments.