With 2020 in full swing, to many, the holiday season seems like a distant memory. However, for some, those purchases over the silly season have come back to haunt, in the form of the dreaded credit card bill. 'That's future me's problem, I'll worry about paying for it later', always comes sooner than expected!
So if you are afraid to open your mailbox for fear the mailman has left you a nasty 'surprise', it might be worth looking at consolidating your debts.
What is Debt Consolidation?
Debt consolidation is the process combining all your high-interest loans, such as credit card debt, store cards, after-pay accounts and pay-day loans, and replacing them with one low-interest rate loan. It is not a get out of jail free card, but it can help you avoid the outrageous interest rates that these types of loans can incur. The consolidation could be in the form of a new personal loan or be incorporated into your existing home loan.
The Benefits
Lower interest rates will result in lower monthly repayments. This means you should be able to pay off your outstanding debts sooner and save on interest.
Consolidating makes your debts easier to manage. If you are juggling multiple loan repayments each month, consolidating these loans into a single loan will result in only a single payment each month.
More flexible repayment options. If you are currently trying to pay off multiple debts, you will likely be locked into the current repayment terms and conditions. Consolidating your debts into your home loan or into a lower rate personal loan will give you new repayment options to allow you to pay this total debt off sooner.
While debt consolidation may provide an option to reduce your monthly payments, it can also mean extending your debts over a longer period of time, which ultimately could end up costing you more in the long run. Debt consolidation is a strategy where no two solutions are the same, making it so important to explore all options.
So, if the idea of debt consolidation sounds like a life-raft in the endless ocean of debt, we can help you. Speak soon, Michael