Debt is fairly common in America. In fact, on an average, every household with a credit card, has more than $15,000 in debt; so, many people consider using debt consolidation to help them pay off their debt.
After all, there are lots of benefits to debt consolidation. It can lower overall interest rates, it means people only have to make one monthly payment. and it tends to make debt seem less overwhelming.
However, it is important to ask yourself a few things before you decide to go ahead with debt consolidation, as it is a serious financial move.
Here are 3 things you should ask yourself before you decide to go ahead with debt consolidation.
1 Will it help you get lower interest rates?
One of the main reasons why people consolidate their debt is to lower the interest rates that they pay.
This can be very useful, but it is important to make sure that you would actually benefit from reduced interest rates before accepting debt consolidation.
For some people, it may be worth considering other options, such as an everyday credit card. After all, there are over one million people in the US with credit cards; so they can be a good financial decision.But once again, you should make sure to review individual credit card benefits so that you know you are getting a deal that can help you pay off your debt.
2 Do you struggle to keep up with the monthly payments?
If you have lots of different debts that are owed to different companies, debt consolidation could be a great idea.
Many people struggle to keep up with all the different payments, and this means that they are at risk of falling behind, so they would benefit from a debt consolidation plan.
This will make it much easier for them to pay back their debt, as they only need to make one payment a month.
3 Have you created a debt repayment plan?
Before you go ahead with debt consolidation, you should make sure that you have tried to get out of the debt yourself.
One way to do this is by setting a budget, as this will make it much easier for you to keep up with repayments.
For many people, debt consolidation is the best option, especially if they owe the debt to multiple companies. However, it is important to make sure that you have tried budgeting beforehand, as no one should rush into a big financial decision without trying other options first.