When you have too much credit card debt and you’re juggling multiple payments each month in a struggle to get by, debt consolidation can often provide the debt relief you need. It allows you to combine multiple unsecured credit card debts into single, low monthly payment. You pay less each month and only have to worry about making one payment. In addition, you may be able to pay off your debts faster to get your household to a better place financially.
Consolidated Credit Solutions has certified credit counselors that are experts at debt consolidation. They can answer any questions you have about the different options you have for debt consolidation and provide direction to help you get the debt relief you need. Give us a call at to speak with a certified credit counselor today.
How does debt consolidation work?
Debt consolidation takes multiple unsecured debts and combines them into one monthly payment. The goal of consolidation is reduce the amount of money you spend each month on your debts, so you can stop struggling to keep up with your obligations. It also allows you to simplify your monthly budget, because you only have to pay one bill on your debts instead of multiple bills at different times.
Let’s say you have 5 high interest credit cards with a total of $25,000 of debt and interest rates that range from 17%-19%. The goal with debt consolidation is to combine all of those debts into a single account with a dramatically lower interest rate—in some consolidation, you can get your interest as low as 6%.
Instead of taking the rest of your life to pay off your debt, you can get it paid off in a few years, because your debt payments are more manageable and the debt isn’t building up interest as fast as it was on your credit cards. You still pay your debts back in-full but you don’t pay as much in interest, you pay less each month, and you can pay your debt off much faster than you would have without consolidation. Of course, you have to choose the right debt consolidation option to make it work.
A debt consolidation loan is a personal loan you take out specifically for the purpose of consolidating your debts. You will need a strong credit rating in order to qualify for an interest rate that’s low enough to make this a workable option for improving your financial situation. There are two types of debt consolidation loans—secured and unsecured—and there are certain risks involved that you must take into account before you consolidate.
A debt management program is a type of debt consolidation that doesn’t require you to take out a loan or open a line of credit. It’s a program that you enroll in through a credit counseling agency, so your credit rating isn’t a factor in determining if you qualify. This means debt management plans are available even if you have bad credit or your credit has been damaged by your debt.