Why Consolidate Your Debts?

Introduction

If you’re strapped for cash and have multiple debts, consolidating your debts can help to eliminate them sooner and save you money in the long run. The benefits of this method to consolidate debt include the following:

Eliminate your debts sooner.

• Reduce interest payments. The longer you can hold off on paying off your debt, the more money you will save in interest.
• Pay off your debts sooner. If you have several debts that are all paid off over time, then this may not be as beneficial because each one is still adding to your debt load at different interest rates (and possibly late fees).
• Stop paying interest and stop paying late fees. If you’ve got a high-interest-rate credit card with an annual fee attached, then getting rid of that card could save hundreds of dollars annually!

Pay less interest each month.

To consolidate debt, you can lower the interest rate and monthly payment. This will help you pay off your debts more quickly and save money in the long run.

For example, a $10,000 credit card balance with an 18% interest rate would cost $1,800 per year in interest alone if it was not consolidated into one loan payment every month. However, if you consolidated this debt into a single loan with an APR of 4% (the average national APR), then each month’s payment only costs $300 instead of $1,800—a savings of about $450 per year!

Reduce stress and sleep better at night.

While it is true that consolidating your debts will help you sleep better at night, there are other benefits. For example, not having to worry about paying off multiple debts means focusing on other things in life and avoiding stress by not worrying about one more bill or missed payment.

You may have more time to focus on your family and other things that make you happy.

Protect your credit rating.

Your credit rating is the number that measures your creditworthiness. The higher your score, the better interest rates you can get on loans and other financial products. A low score will make it more challenging to borrow money or access other services like car insurance or even cell phone service.

Consolidation may help improve your credit rating by combining multiple accounts into one loan so that each account is reported as one item on your report instead of several separate ones (which would lower that combined number).

Simplify your finances.

A single monthly payment is more accessible to budget and pay. It’s also more economical than multiple bills, which can be a hassle if you juggle different payments on different accounts or find ways to make them fit within your budget.

One creditor to deal with is another plus when consolidating debts—and in most cases, one creditor isn’t enough! Even if you have only one credit card and one mortgage loan (or similar), there will probably still be other loans that need attention: student loans, car loans etc.

There are many benefits to consolidating your debts

There are many benefits to consolidating your debts, including:

• Eliminate your debts sooner. When you consolidate all of your credit card accounts into one loan, it will be easier to pay off each one simultaneously. This means you can eliminate any interest that would have been added by paying off one account before moving on to another. As a result, this can help reduce stress and improve sleep quality at night!
• Pay less interest each month. If you’re paying high-interest rates on multiple loans or credit cards, combining them into one will lower those costs significantly.

Conclusion

If you’re ready to take the next step towards financial freedom, consolidating your debts is a great place to start. By getting rid of your high-interest credit card debt and other loans, you can save thousands of dollars in interest payments each year—or more if you have other debts that are also being paid off simultaneously.