Debt consolidation is a good way to get out of debt if it reduces your interest charges and helps you pay off what you owe faster. Strategically using a debt consolidation loan or balance transfer credit card to combine high-interest debt into one manageable monthly payment can indeed help you save and get out of debt sooner. It can also help prevent negative outcomes such as missed payments. You just need to confirm that your spending and payment habits are sustainable if you want to stay out of debt moving forward.
Reasons Why Debt Consolidation Is a Good Way to Get Out of Debt
It can get you a lower interest rate
You should consider consolidating if you can get a loan or credit card with a lower interest rate than your existing debts charge. This will save you money over time. To see how much you could save by consolidating, check out the free debt consolidation calculator on WalletHub.
It can help you manage payments
Having many monthly payments can be a hassle and may lead to missing payments or defaulting. When you fully consolidate debt, you will only have to make one payment per month.
It can help you pay off your debts sooner
If you get a debt consolidation loan, you can repay it faster than expected, often without penalty, which will save you money on interest. Even if you don’t pay off the loan sooner than expected, lower interest charges can help you reach debt freedom sooner than you would otherwise.
With a balance transfer credit card, you may be able to get a 0% APR introductory period on balance transfers. The average introductory period is 13 months, and it’s followed by a high regular APR, so you should try to fully pay off your balance during this period.
Now that you know a little more about why debt consolidation is a good way to get out of debt, you can start comparing your options. To see the top-ranked offers, check out WalletHub’s picks for the best debt consolidation loans and the best balance transfer credit cards.
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