Credit card debt can be frustrating, overwhelming, and feel impossible to pay off. It’s also expensive! The average credit card interest rate is around 16%.
One way you can tackle credit card debt is to consolidate the debt using a personal loan. Debt consolidation loans involve taking out one new loan to pay off high-interest debts (such as credit cards and loans).
Here are three of the top benefits of debt consolidation loans.
A debt consolidation loan offers a light at the end of the tunnel because, from the day you sign your loan contract, you know precisely when the total debt will be paid off. You have a plan for paying off your debt!
On the other hand, if you have a lot of credit card debt and can only make the monthly payments, you are typically paying the interest down and barely chipping away at the principal balance. Using this strategy will take you much longer to pay off your debt, and you will likely pay thousands more for whatever you purchased using your credit card.
If you struggle to cover your monthly credit card payments, a debt consolidation loan could give you some breathing room. Most of the time, obtaining a debt consolidation loan can lower your payments. In some cases, it might take you longer to pay off your balance, but you might still save money on overall interest compared to your credit cards. However, it is important to understand the terms of your loan and make sure that is the case before taking out a loan.
Juggling multiple credit card bills each month can be stressful! If keeping track of your payments and due dates feels like too much, consolidating your debt into one payment can help you stay financially organized. And if you take the extra step of having your debt consolidation loan automatically deducted from your bank account, you won’t have to worry about late payments.
Debt consolidation may not be for everyone, but if you consider your options as well as the pros and cons, it can help you effectively manage and reduce your debt over time.
At First Independent Bank, we are helping people in Central and Southwest Minnesota attack their debt strategically and effectively, giving them a path to financial freedom that otherwise wouldn’t be possible. Our lending experts can personally work with you to figure out your best options to put a stronger financial future within reach.