Having debt is a widespread phenomenon and can be highly personal. Fortunately, you are able to find many numerous methods available to you for debt repayment. The fewer creditors you owe money to, the simpler the process of getting your debt resolved. You should consider a few debt payoff options and even debt consolidation programs.
Methods for repaying debt
Before taking out any loans to help you cover your debt, consider these two methods advocated by Dave Ramsey host of a popular personal finance show and the best author of many books. Debt snowball and debt avalanche are two methods that are effective in helping many people with their loan issues.
Debt snowball: The debt snowball is a method where you start with your smallest debts pay them off and then work your way up to the larger debts you have while making minimum payments on the other debts.
Debt Avalanche: This debt avalanche is another popular method to handle your debts and its works by focusing on one debt at a time. But the main goal of the debt avalanche method is to focus on the debts that have the highest interest rate first and then work your way down.
Debt consolidation is another great choice to consider when trying to resolve your debt problems. This option can be accomplished by using a lender that offers debt consolidation loans or a balance transfer credit card that can help you put your debt into a more manageable form.
If you are interested in having one single debt payment debt consolidation might be the right choice for you. Here are some ways to tell if debt consolidation is the right choice for you.
You have a great credit score.
The approval for a personal loan or a balance transfer card is directly tied to your credit score. This means the better your credit score, the better your loan choices are available. When you have a higher credit score you are able to get approved for a lower interest rate which will help you maximize your debt consolidation loan.
A balance transfer credit card is another great option that can maximize your debt consolidation journey. A balance transfer credit card can have an introductory 0% APR period that can last anywhere from 12-21 months, allowing you close to two years to pay off the card. This would be an amazing option but requires a higher credit score to get approved for.
Trying to keep things simple.
A good way to simplify and convenient solution to your debt would be using a debt consolidation loan. By using debt consolidation loans you’re combining multiple higher credit card debts and combining it into one simple payment.
When getting one payment you are able to stay on top of it more carefully and decrease your risk of missing your payment. To simplify your debt, really consider a debt consolidation loan.
Saving you interest
Along with other things debt consolidation can do, it can always save you money in interest on a monthly basis. This is particularly true when you have a high-interest credit card and paying off with a lower interest rate will save you money in interest over time.
Suppose your existing credit card levies a 20% interest rate, and you’re approved for a personal loan at 10%. This could result in a significant amount of savings on interest, which could amount to thousands of dollars. Be also sure to look into balance transfer credit cards which have 0% interest for a period of time giving you the best advantage.
These are some ways to consolidate your debt and not every loan option might be the right choice for you. Be sure to look into other alternatives and make a plan to pay back your loan if you end up going that route.
Disclaimer: We make every effort to ensure the accuracy and currency of our information. However, the information presented may differ from what you find when you visit a financial institution, service provider, or product site. We do not provide warranties for any financial products, shopping products, or services. When reviewing offers, please carefully read the terms and conditions of the financial institution. Pre-qualified offers are not binding. If you notice any discrepancies in your credit score or report, please contact TransUnion® directly. Our partners compensate us for featuring their products on our site, and this may affect the products we write about and their placement on the page. However, this does not influence our evaluations, and our opinions remain independent.