If you're facing problems to manage your bills properly, then bill consolidation may be your right choice. Attending a no-obligation free counseling session, with a debt relief company, will enable you to understand whether you should consolidate your bills or look for some other options.
What is bill consolidation?
It is a way to consolidate bills into one payment every month. With the help of this option, you can consolidate credit card bills along with your utility bills, payday loans, private student loans, personal loans and other unsecured debts.
How to consolidate bills
1 Bill consolidation program
In this consolidation method, you take help from bill consolidation companies to repay your debts within a definite period. Let's check out how you can pay your bills with the help of a consolidation company.
How bill consolidation programs work
2 Bill consolidation loan
You take out a loan from a financial institution and repay your current bills/debts with that amount. Thus, with a single consolidation loan
, you consolidate bills into one monthly payment.
3 Balance transfer method
This is a DIY option wherein, with your creditors' approval, you transfer your high-interest debts to a low-interest card if there is available credit limit. Thus, you can consolidate your bills to repay them with ease.
Bill consolidation laws to protect customers
The laws, protecting bill consolidation loans, focus on protecting the regulation of financial institutions, which provide such loans:
- Nationally chartered banks along with few state banks need to be insured by the Federal Deposit Insurance Corporation. The FDIC is a government corporation created in 1933 which protects consumers from problems created by bank failures in 1929.
- The Fair Lending Act and the Truth Lending Act protect consumers by ensuring that all the terms and conditions of bill consolidation loans are provided to customers when they take out the loans.
- The law of the state, where the customer resides, governs the terms of the loan. The amount of interest a financial institution can charge is also governed by the state.
How can bill consolidation help you?
- Reduction in interest rate
- Lower monthly payments
- Stress gets reduced
- Single monthly payment
- Don't have to deal with several creditors
- Do not have to manage multiple bills
- Positive remark on credit report
- Credit score may improve
can save you
Frequently asked questions (FAQ):
Whatever option you choose to consolidate your bills, you can repay your multiple bills with just a single payment every month. It becomes relatively easier to manage one payment instead of multiple payments and the due dates.
It depends on the option you choose to consolidate bills into one monthly payment. If you take out a personal loan, then your credit utilization ratio will go down thus helping you to increase your score. What happens is, credit utilization ratio is, the amount of debt by your available credit limit. Even if you take out a balance transfer card with a significant credit limit, then also this consolidation option can help you to raise your score.
However, if your credit rating is good, then you’ll also enjoy favorable terms and conditions on your new credit card and personal/consolidation loan.
If you have a bad credit record, then taking out a consolidation loan with favorable terms may be a bit difficult. Even if you qualify for the loan, you’d have to pay a higher rate of interest. So, a better alternative is to enroll in a consolidation program and repay your debts with complete professional help. If you make the agreed upon payments, you’ll be able to repay the debts within a definite period.
However, you can approach a credit union as they usually offer loans at comparatively low-interest rates.
A secured bill consolidation loan is a good option especially for people who want to consolidate bills with bad credit. Apart from enrolling in a consolidation program, you can take out a home equity loan if you have enough equity in the property. Alternatively, you can also opt for cash-out refinancing and repay your credit cards and utility bills with the extra amount. This way, you can consolidate debt into a mortgage at a relatively low-interest rate.
By opting for utility bill consolidation, you can repay these bills:
- Department store cards
- Credit cards
- Medical bills
- Private student loans
- Personal loans
- Unpaid taxes
- Utility bills
Along with these, you can also pay off any debt that has gone to the internal or third-party collections department.
You can pay utility bills online through bill consolidation. It works the same way just like any other bill consolidation strategy, and you can repay your unpaid bills for water and sewer, electricity, gas bills, trash recycling, technology utilities, house rent, etc. Whatever option you choose, you can repay these bills within a definite time and consolidate bills into one payment every month.