The term “debt consolidation” may seem complex to those who aren’t familiar with the strategy. However, it’s a fairly straightforward process. Many people choose debt consolidation to tackle their higher-interest debt. Consolidating debt is a popular strategy for a reason: it can easily help erase higher-interest debt while saving you money.
Nonetheless, it’s understandable if you still have questions about the debt consolidation process. Here’s a good place to start: Approach important financial decisions by attempting to find the option that’s best for your situation. One common question we often hear from people considering debt consolidation is: “When is the right time to consolidate debt?”
Everyone’s situation is different, but here are a few signs that could indicate it might be debt consolidation time for you.
When You Aren’t Making Payments
Perhaps the most telling sign that it’s debt consolidation time is when you are making late payments, or worse, no payments at all on your higher-interest debt. Making small payments, or ignoring payment due dates, may allow you to temporarily keep extra cash in your pocket, but at what cost? Failing to make payments may have a negative impact to your credit score that could delay life goals such as home ownership. It could likely cost you late fees and possibly higher interest rates, too.
If you’re neglecting multiple bills, it might be the right time to consider consolidating your higher-interest debt. Consolidation can make payments more convenient and manageable in addition to saving you hundreds or even thousands of dollars on interest.
When You Can Get Better Terms
The average U.S. adult carries $3,766 of credit card debt, according to an August 2016 report from the Federal Reserve. And many of those credit card balances come with higher interest rates, depending on the type of credit card and the borrower’s credit history. Debt consolidation loans can come with lower interest rates than credit cards, which decreases interest payments and may reduce the amount of time spent paying off your debt.
With a Discover personal loan, interest rates (from 6.99% to 24.99%) also are locked in at a fixed rate, meaning your rate won’t be subject to fluctuations. The rate you sign on for will be the rate for the full duration of the loan period. No surprises.
If a personal loan offers a lower interest rate than the credit cards you’re currently paying off, it might be the right time to consolidate debt. Lower, fixed rates allow borrowers to pay less interest while paying off debt at a faster pace. You can use a debt payoff calculator to estimate your monthly payment with a personal loan.
When You’re Feeling Overwhelmed
Seemingly every day, a new bill comes in the mail. There’s your credit card for groceries that’s due on the first of the month, a card that gets 5% off your favorite retailer, another card for traveling that’s due on the 15th, and that’s not to mention your utilities, rent and car payment. You do your best to keep up with all of the payments, but it can all be very confusing and frustrating. Sometimes it’s even hard to figure out how to calculate debt.
A debt consolidation loan allows you to combine multiple higher-interest debts into one, easily manageable monthly payment. You can even send the funds from your consolidation loan directly to your creditors. That means less reminders, alerts or notifications crowding your inbox.
If you’re mentally exhausted from managing multiple accounts, it might be the right time to consolidate debt. Consolidating debt takes the stress out of your finances and allows you to immediately pay off long-standing high-interest balances.
When You’re Ready to Take Control
You’re at a busy time in your life, and finances haven’t always been at the top of your priority list. But as you have gained stability, you’re ready to get serious about your financial future. Debt consolidation provides a sensible solution for organizing and eliminating your higher-interest debt.
If after years of trying to balance higher-interest debt, you’re ready to address and improve your financial habits, it might be the right time to consolidate debt. Debt consolidation is a sound strategy that offers a navigable map to eliminating higher-interest debt.
For more details about when to consolidate debt, contact our experts at 1-866-248-1255.