Few things in life feel better than this: you make a decision, and your decision pays off right away.
And that’s exactly how you could feel the very first month when you make the decision to consolidate higher-interest debts into a lower-interest personal loan.
It’s a strategy highly recommended by many financial experts. According to the U.S. News & World Report, most experts agree: the best way to get finances where you want them is to pay off higher-interest debts first.
How fast could you see the benefits? Here are four important benefits you could see right away…
1. The very first month, higher-interest balances could be PAID-IN-FULL.
Imagine looking through your mail, opening your higher-interest statements, and seeing a balance you’ve probably been waiting to see for a long time…ZERO. In just one month, all those higher-interest debts that may have taken years to accumulate are now “PAID IN FULL.” Imagine how great that would feel!
(As an added convenience, if you prefer, many lenders like Discover and others will pay off debt balances directly for you. You don’t even have to write a check.)
2. Keep up to thousands in interest that would otherwise have to be paid.
Starting the very first month, you could keep more of your hard-earned money in your pocket. Money that would have otherwise been paid in higher-interest can now be used for more important needs. As one month leads to another, the savings from a lower-interest personal loan can really add up. In some cases, hundreds or thousands of dollars in future interest payments could be completely eliminated. It’s almost like finding money!
Consider this example…
Let’s say a gentleman, who we’ll call Jim, is carrying a handful of higher-interest credit cards totaling $15,000. And let’s say Jim’s average interest rate is today’s national average of 15.00% APR.1 Let’s also assume that Jim is making monthly payments totaling $359, slightly more than the minimum payments required on all of Jim’s balances.
If Jim continued on this path, until his balances are paid off, Jim would spend a total of $6,349 in interest payments.2
Now let’s say Jim decides to consolidate all $15,000 of his debt into one low interest rate personal loan. For this example, let’s say Jim was approved for a Discover Personal Loan with a rate of 10.99% APR 3.
Thanks to Jim’s lower 10.99% APR, Jim would completely eliminate a total of $2,355 in interest payments he would have otherwise had to pay. And here’s the best part: all the while, Jim would be making the same $359 monthly payment as before. If you were in Jim’s shoes, just think of all the things you could do with an extra $2,355.
Furthermore, if Jim were approved for Discover’s lowest rate of 6.99% APR, he would eliminate $4,110 in future interest payments. Who couldn’t use an extra $4,110?
3. Get out debt faster.
Here’s another option that could pay off in a big way. Staying with Jim’s credit card payment example… because Jim is making the same monthly payment as before – but paying less in interest with a personal loan – Jim can get to PAID-IN-FULL faster.
How much faster? In Jim’s case, if he were approved for Discover’s lowest rate of 6.99%, it’s a whole year faster! Thanks to Jim’s lower-interest personal loan, Jim would pay off his higher-interest debts 12 months faster compared to his current situation. Debts that would have taken Jim 60 months to pay off, would be PAID-IN-FULL in just 48 months.
4. Only one monthly bill to pay, always the same amount.
Finally, there’s one more way consolidating multiple debts into a lower-interest personal loan could help you starting the very first month: you’ll only have one monthly bill to pay, always for the same amount. Personal loans offer fixed rates that do not increase over the life of the loan. That means payments never change over the life of the loan. No more juggling a handful of bills every month. No more having to figure out how much to pay toward each balance every month. You’ll always know – in advance – exactly how much you need to set aside.
The bottom line is this: if you’d like to make a financial decision that could help you right away, getting a personal loan for debt consolidation could be the right decision for you.
1.National average credit card APR: http://www.bankrate.com/lite/credit-cards/interest-rate-roundup-012915.aspx January 29, 2015
2.The estimated calculation assumes that Jim makes fixed monthly payments of $359 on time every month until his loan is paid in full, and does not incur additional balances on his existing higher-interest debts. Total interest is based upon a fixed APR of 15% calculated on the average daily balance on a simple interest basis with payments credited to interest then principal, on the last day of the month. Paying more towards your credit cards or more towards your Discover loan will reduce interest paid and the repayment period. Actual results may vary.
3.Discover Personal Loan APR ranges from 6.99% to 29.99%.