3 Smart Ways To Consolidate Your Debt

Thursday, June 13th, 2019
How to Consolidate Your Debt

Are you paying off debt on multiple accounts? Are you juggling multiple payment dates scattered through the month? One option for you to consider is debt consolidation.

What is debt consolidation?

Debt consolidation allows you to take all your existing debt and put them in one account under a single lender where you can make one monthly payment. This is a specific type of personal loan that can be used for unsecured debt from credit card bills, payday loans, and medical bills, to name a few common examples.

Advantages of debt consolidation

Debt is a considerable part of an adult’s life and the key to managing it is to be smart about handling it. Depending on your credit history, particularly your payment history, a debt consolidation loan could afford you a lower interest rate than your current payments. The lower interest rate saves you money. You can opt for a lower monthly payment with a long-term loan with the knowledge that you will likely pay more interest.

Three Options for Debt Consolidation

There are three key options to choose from when it comes to debt consolidation. Each of them have select pros and cons and will be dependent on your situation.

1. A balance transfer credit card

A balance transfer credit card will need to have a limit that’s high enough for you to put all your debt onto. There are a number of credit cards you can apply for that will come with a zero interest introductory rate. If you can make all your monthly payments and pay off the card before the introductory rate is up (typically 18 months), then this could be a sensible option for debt consolidation.

2. A home equity loan

The biggest draw in using a home equity loan as your route of debt consolidation is that the interest rate will be much, much lower. If your debt can’t be contained by a balance transfer credit card or there are other negating factors, you might find the home equity loan option a better fit for consolidating your debt. However, the main point of contention with this route is that you’re putting your home on the line. If you default on the loan, you put your home at risk.

3. A personal loan 

A personal loan can be used for debt consolidation and doesn’t require any sort of collateral. Your interest rate on this will depend on your credit score. The better your score is, the lower your interest rate will be. One main advantage to using a personal loan to consolidate is that you can go through a local financial institution, allowing you to receive personal attention as you go through the process. This can be invaluable when it comes to paying off debt and saving money on interest. This may also be one of the easiest options to initiate, as the first step is to call or visit an institution and ask about their debt consolidation options.

Your Membership Matters at BFCU

At Borger Federal Credit Union, we care about the needs and empowerment of our members. We strive to provide members with valuable insight and financial advice. We are able to offer lower rates on loans, and offer a variety of services at the best possible rates. Call Us today and start enjoying the benefits of membership. You can also Contact Us through email or visit us during business hours to speak to a representative. We are located at 1051 N. Florida Borger, TX 79007.

 

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