Debt consolidation: 5 Smart ways to consolidate debt and save bucks
DebtConsolidationCare - Your first step to success (By Michael Bovee)
When debt consolidation plan is right for you
- You have to pay only once every month
- You can save on interest rates and monthly payments
- You can get out of debt quickly
- You don't want to pay extra fees and penalties
How you can benefit from it
- You can handle credit card debts smartly
- You can save a lot on interests, fees and fines
- You're likely to receive less collection calls
- You have to pay less to creditors every month
Debt consolidation - What is it?
It is a way to manage your multiple debts efficiently. By consolidating debt, you can repay the outstanding balances at a relatively lower rate of interest and with the help of single monthly payments.
Consolidating debt - Is it good? How does it work?
Debt consolidation is good for those people who are unable to pay off credit card debts, personal loans, payday loans, private student loans and medical debts due to costly financial mistakes. This debt relief option is good for those who want to pay off unpaid debts, manage multiple bills efficiently, pay less on interest rates and save money. Know more about its pros and cons...
Let us see this example to know how debt consolidation would work for you.
Your outstanding balance on a payday loan (10%) - $15,000
Your outstanding balance on a personal loan (15%) - $20,000
So, your average interest rate (20% + 10% + 15%)/3 = 15%
After you consolidate your debts, your interest rates are lowered to:
Payday loan - 8%
Personal loan - 10%
So, the new interest rate is (15% + 8% + 10%)/3 = 11%
This implies you're paying 4% less on the interest rate.
If your total debt is $60,000, then you'll save (4% * 60000) = $2400.