How to Consolidate Debt: Turn to Your Bank
Debt consolidation is the process of combining your existing debts into one new, larger loan. For many people struggling with a significant amount of debt, consolidation can offer several benefits. These include helping you to save money on overall costs while also reducing your monthly payment. In many cases, your local bank can offer help to you in consolidating your debts. There are several key things to know about this process.
Why Should You Consider Debt Consolidation?
Consumers with numerous individual debts, such as credit cards, personal loans and medical bills, can easily become overwhelmed with all of the different payments they must make — particularly given these debts are for different amounts and with different payment timelines. In the long term, it can take years to repay debt if you are only making the minimum payment each month. This is when debt consolidation can help. When you obtain a single, larger loan and pay off your existing debt with it, you get several benefits:
- You have just one payment to make each month. As a result, you are able to pay more each month towards that debt.
- It can help you to pay off your debt faster. And the sooner you pay it off, the less you spend on your debt.
- Many times, you can obtain a personal loan to assist in your debt consolidation. Other times, home equity loans can help. In all cases, these interest rates tend to be significantly lower than the average credit card rate. Therefore, this can help you to save money.
- You may see your credit score improve. As you pay off your other debts, your credit score can rise. Keep making payments on time!
- Debt consolidation can help you avoid bankruptcy and aid you in getting creditors to stop calling you.
If you are frustrated with your existing debt, call your local bank. Your bank may be able to offer you a personal loan for those with above-average credit. This is a no-collateral type of loan. If you have equity in your home, you may be able to borrow against it for debt consolidation. This can happen in several ways, such as with a home equity loan or through refinancing your existing mortgage into a new one. In these cases, you’ll use the value of your home to pay off your debts.
Should you consider debt consolidation? Many people benefit from it by making wise financial decisions about paying down their debt. However, it is always important to learn about the various options available to you. Meet with your local bank representative to see if you qualify for a personal debt consolidation loan or a home equity loan for debt consolidation.