When you have several high interest credit accounts, you also have several payments to make each month. By consolidating your debt, you reduce all of those payments down to one.
It eliminates the confusion caused by paying several bills that can result in late payment penalties and extra fees.
Interest Debt
Consolidating several high interest credit accounts under one low interest consolidation program will reduce your interest obligation. That is extra money you will not have to pay during the life of your credit accounts because you brought all of the balances under one loan payment.
Service Charges
A variety of credit card payments means you are paying several service charges each month. When you consolidate your debt, all of those service charges are replaced by one loan service charge. You will realize a significant savings to your monthly obligations based solely on the reduction in service charges.
Improve Your Credit
You can improve your credit in two ways with a debt consolidation. When you eliminate the balances on your credit cards but keep the credit accounts active, you are increasing the amount of available credit you have. That increases your credit score. You will also help your credit score by making your monthly payments on time for your new consolidation loan.
Improve Cash Flow
Debt consolidation reduces the amount of money you pay to your various credit accounts each month. The reduction in your monthly obligations will increase your available cash so long as your monthly income does not go down.
Avoid Bankruptcy
For some consumers, bankruptcy is considered an option when high interest credit card debt becomes too difficult to pay each month. By using debt consolidation to control your financial obligations, you can avoid having to file bankruptcy.
Start Being Fiscally Responsible
The need for debt consolidation arises out of a careless use of credit accounts. Consumers sign up for department store and online retailer credit accounts they do not need, and then begin racking up high balances topped off by double-digit interest rates. Debt consolidation allows you the chance to get your finances under control and become fiscally responsible.
Reduce Reliance on Credit
Your improved cash flow as a result of debt consolidation will allow you to pay more bills and take care of more monthly expenses in cash. Over time, you will start to appreciate paying for something once without having to pay interest on it every month for years after. Debt consolidation reduces your dependency on credit and shows you the financial advantages of paying in cash.
Catch Up
Prior to using a debt consolidation program, a consumer can get behind on payments for important items such as a car or a home. When you get your debt under control with debt consolidation, you are able to free up the financial resources you need to get your finances back under control.
Create Options
When you do debt consolidation right, you create financial options for yourself. Doing debt consolidation right means keeping your credit accounts open but using them sparingly, and paying your debt consolidation payments on time each month. Options such as qualifying for a new mortgage, getting financing for a new vehicle or getting approved for a loan to pay for your child’s education begin to open up for you.