Are you making payments on multiple loans, yet the balances barely seem to drop? Are you overwhelmed trying to manage numerous due dates for bills like credit cards, auto loans, medical debt, or personal loans? A debt consolidation could help you simplify and pay down your debts faster.
How debt consolidation works
Debt consolidation combines two or more debts into one new loan with one new monthly payment, often with a lower interest rate compared with what you were paying before.
Three ways to consolidate debt
Credit card. Transfer balances from high-interest credit cards and loans to a low-interest rate credit card.
Personal loan. Pay off your loan balances with a closed-end personal loan, which has a specified start and end date, with a fixed monthly payment.
Home equity loan or home equity line of credit. Leverage the equity in your home and enjoy lower interest rates and more flexible terms compared to many other types of financing.
Debt consolidation factors to consider
• Total amount of debt
• Credit history and credit score
• Available funds for monthly payments
• A plan for paying down the new loan
Debt consolidation pros
• One loan and one monthly payment helps simplify budgeting
• A new loan with a lower interest rate means you’ll pay less overall
• You may pay down your debt faster
Debt consolidation cons
• You may accumulate new debt if you continue adding to your credit card balance
• It could take longer to pay off the debt if you pay the minimum each month or have a variable interest rate loan
• Borrowing from your home’s equity could put you at risk of losing your house
We’re here to help
A debt consolidation loan can help you get back on track toward your financial goals and provide peace of mind. Use our debt consolidation calculator to help determine if this tactic makes sense for you.
To learn more, reach us by visiting a local branch, calling us at 1-877-GOLDEN 1 or using the Golden 1 mobile app.
Sources
“What is debt consolidation and should I consolidate?” Amrita Jayakumar, NerdWallet, posted Feb. 10, 2021, https://www.nerdwallet.com/article/finance/consolidate-debt, accessed June 28, 2021
“Pros and Cons of Debt Consolidation,” Kiah Treece and Jordan Tarver, Forbes, updated April 20, 2021, https://www.forbes.com/advisor/personal-loans/pros-and-cons-of-debt-consolidation/, accessed July 1, 2021
“What is debt consolidation and how does it work?” Kiah Treece, Forbes, updated Feb. 2, 2021,
https://www.forbes.com/advisor/personal-loans/what-is-debt-consolidation/, accessed July 1, 2021
“Is debt consolidation right for you?” Bankrate, https://www.bankrate.com/personal-finance/debt/debt-consolidation/, accessed July 1, 2021
