Are you in over your head in debt? Maybe you racked up your credit cards in an emergency or you used your credit cards to start a business and now you can’t keep track of what you owe when.
Credit card debt can be overwhelming, especially when you have multiple credit cards. Keeping track of due dates, interest rates, and minimum payment requirements can be too much. If you miss one payment, it can destroy your credit score, but if you miss multiple, you may have a hard time bouncing back from the bad credit.
Personal debt consolidation can be a great way to get your head above water. Here’s how it works.
Debt consolidation means you refinance all credit card debt into one. It’s often an unsecured personal loan, but you may be able to take out home equity too, using your home as collateral.
No matter which option you choose, you pay off all credit cards, and make one payment each month. With one payment, it’s easier to make your payments on time and even pay the debt down faster.
If you look at your credit cards, you likely have cards with different interest rates and minimum payment requirements. If you only make the minimum payments, you pay thousands of dollars in interest and stretching the debt out over several years.
When you put it all in one, you have one interest rate and one payment. The interest rates are usually much lower than the rates on credit cards, which frees up your finances and even allows you to make extra payments, getting out of debt faster.
Besides your finances, debt consolidation helps your credit score too. When you pay off your credit cards, you decrease your credit utilization rate (amount of credit card debt outstanding). If you make your payments on time, you’ll increase your credit score with a timely payment history too.
If you constantly wonder how you’ll get out of credit card debt, consider debt consolidation. Read the fine print and make sure you understand the fees and interest rates charged, but typically debt consolidation saves you significant money and improves your credit score in just a few months.
Get yourself out of debt today and consider personal debt consolidation to improve your finances.
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