The 3 Advantages of Debt Consolidation for Outstanding Credit Card Debt
Efficiency, momentum, a faster rate – are all components that can make paying off your debts more obtainable. When debt continues to be an ongoing problem for you – it is likely that you will look for methods of trying to improve your ability to pay it down with a higher level of success.
Debt consolidation, is a common method of debt repayment that many individuals across the country turn to to help them with this process. Whether it may be you are suddenly seeing your living expenses increase and are not able to make payments on time, or you are have a large amount of high interest credit card debt making it far too challenging to pay down – consolidating your debts may be the best way to get things rolling in the debt-relief department.
With that being said, credit card debt consolidation is one of the most common forms of consolidation that occurs in the lives on many borrowers. If you are currently balancing more than one credit card or loans with high interest – perhaps debt consolidation is the way to go.
First of all, consolidating your credit card debts can improve your finances in a variety of ways. Here are 3 advantages of debt consolidation that can help you attack your outstanding credit card debt as well as saving some additionally money each month.
1) Reduced Interest Rates
First and foremost, when you consolidate your high interest credit card debts into one loan – you can secure a loan with an overall lower interest rate. This can allow you to pay down you debts at a much faster rate – and by doing so you will save quite a bit of money that is no longer being eaten up by high interest charges.
As our credit card debts continue to grow, it can become harder and harder to pay off more than the minimum balance. At this rate, is it also likely that you are reduced to only paying off interest charges and not any money off of the actual credit card balance. Translation – you really are not paying off your debt. With lower interest charges however, you can then attack your actual balance – not just the interest – and as a result can get rid of that debt much sooner. When you think about it, you will also be paying less interest over time on this loan as well as saving some more money each month that could really add up for you in the long run.
2) One Monthly Payment
One of the trickiest aspects of managing our finances has to do with having so many different payments to make each month. While of course seeing how far our money will stretch each month is difficult in and of itself – it can be very overwhelming to try and keep all of the payments straight in our minds. Even with the necessary funds, sometimes missed payments can even occur as a result of an oversight.
If for example, you are currently making 3 monthly payments to 3 different credit card companies at a time – this is likely to be far too much to keep up with. However, if instead you were to choose to combine these cards into one loan – then you would only have one monthly payment to account for and could stay on top of this situation with a lot more ease. Again, just as your interest charges would be less on this one loan – through loan consolidation you can also create more peace of mind for yourself and know that you are not letting payments fall through the cracks. With missed payments, debt problems can in cur even further – with credit score issues coming into play that will impact your ability to obtain important loans in the future. By continuing to maintain proper management of your loan payments however, you can be more effective in your debt repayment – and you may just find too that you can find some additional money to spare each month.
3) Improve your Cash Flow
With high debts that creep up or don’t budget – you are less likely to have any extra cash to spare each month and your finances will again be stretched quite far. By looking to debt consolidation to help you repay your loans in a more efficient manner this will keep your debt levels going down as opposed to in an upward direction.
Ultimately, without cash-flow you will have to rely more and more on credit, taking out further loans that will force you deeper into debt. However, by opting to consolidation your credit card debts -which again are the likely culprits for higher interest – this can help you free up some additionally income for other purposes – like savings or for further debt repayment, whichever is your top priority at that point in time.
As you can see, there are some important features associated with debt consolidation that can be a very beneficial means of improving your debt. With high levels of outstanding debt continuing to grow and grow, it is definitely worth looking into as a debt-relief management strategy.
This day and age, it is so easy to swipe your credit cards left and right, and now we can even have the option to tap for payment – which takes even less overall effort. While this may help save time in the grocery store line or the retail outlet – it can also be a greater contributor of credit card debt.
That being said, while proper credit card management is always important – the reality is that this type of debt is very common. With credit card debt consolidation a possible solution for you to help reduce your debt and save some money – it could also be the vehicle that can get you on the road to proper financial management moving forward.