Making fluctuating monthly payments on different accounts can be difficult. It’s hard to budget when the amounts vary, and it’s hard to keep track of all the payments. Consolidating your debt simplifies your debt, making it easier to pay it off.
Eliminate High-Interest Debt
Monthly interest can make it difficult to pay off debt. Credit cards are notorious for having high interest rates. Sometimes, if you’re only paying the minimum payment, you’re barely covering the interest. It’s frustrating paying off as much as you can afford only to have the interest prevent you from making even a dent.
By consolidating your debt, you can pay a lower interest rate, making your payments mean something. With lower interest rates, you’re actually paying toward your debt, which is more manageable than just paying off the interest.
Save Time with One Payment
Some credit cards and similar debts don’t allow you to set up auto pay, and it’s a pain to have to pay your monthly bill. The charges are high if you accidentally forget. Even if you have autopay, it can be hard to know what to pay. Assuming you don’t pay the entire credit-card bill every month, you shouldn’t just pay the minimum.
When you consolidate your debt, you only have one bill to pay. You don’t have to continually monitor all your bills or decide which one to put more money toward every month.
Life is much more comfortable when you’re only dealing with one loan instead of multiple credit cards, personal loans, and student loans every month. People often struggle to pay off student loans, and many people don’t even realize their student loans can be consolidated.
Lower Your Monthly Payments
When you consolidate your debt, you’re likely to have a lower monthly payment than all your debt combined. You can always pay more toward your debt to help pay it off faster, but if you have a tight month, you’ll appreciate the lower payments.
Raise Your Credit Score
One of the bigger factors affecting your credit score is your utilization. The utilization refers to the amount of credit you have available. When your credit cards are maxed out, your score drops significantly. Consolidating your debt frees up those credit cards so your credit score will improve. As you pay off your loan, your credit score continues to go up.
Improve Your Payment Terms
You can’t necessarily negotiate the payment terms on your credit-card debt, but you can find a loan with the repayment terms you want. If you would rather pay off your debt faster, you can apply for a loan with higher payments over a shorter period. If you’re strapped for cash and need smaller monthly payments, you can set the terms for that as well. Consolidating your debt is a way to start fresh as you set the terms of your repayment plan.
Debt consolidation makes it easier to manage your money and pay off your debt. You can gain financial control instead of stressing over money every month.