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Each time you have to pay your bills, you get a headache. You sit and try to figure out how you will manage it. Ease your worries by combining your debt into one payment per month. You will enjoy paying a lower interest rate and a lower payment balance.

Why debt consolidation works

  • One Payment per month

Too many credit cards cause stress each time you have to make payments, so keep only one. It will be easier to manage your monthly payments.

  • Lower interest rates

When you roll over your debt in one, the rates are much lower. It could be a 10% decrease in rates.

  • Pay off debt in less time

Your monthly finance charges will be lower because of the reduced interest rate. By adding more money to your monthly payments, it will help you pay off your debt faster.

  • Prevent damage to your credit

Studies show if you miss several payments or file for bankruptcy, it will lower your credit score. By combining all your debt in one place, you can avoid late fees and filing for bankruptcy.

Ways to consolidate your debt

  • Taking out personal loans

One way to combine your debt is to take out a personal loan. The lender will issue you a fixed payment, and the repayment term can range from two to five years. You will get an interest rate based on your credit score.

  • Transfer balance to one credit card

If you have an excellent credit history, apply for a 0% interest credit card. The card issuer gives you a promotional period in which to repay the loan. If you pay the full balance within the specified time, you do not have to pay any interest on the loan. Speak to the lender about the conditions of the loan. Ask them to explain the terms.

  • Take out a Home Equity Line of Credit (HELOC)

A home equity line of credit is money you borrow against the equity in your home. The lender will give you a fixed interest rate lower than most loans. You can also deduct the interest on your tax return.

Disadvantages of debt consolidation

Combining your debt can save you money, but the decision has drawbacks.

  • Incurring more debt

Combining your debt sounds fantastic, but freeing up your debt will give you more money to spend. Use the extra money to settle your debt or save more. If you do not pay attention to how much you pay out, you will spend the extra money.

  • Length of time to pay

It may take you much longer to pay off the loan, but when you add up the interest, it could cost you more. You can avoid the pitfalls by paying off the debt as fast as you can.

  • Fees for balance transfers

The lender does not transfer your balance for free. They will charge from 3 to 5 percent of the balance you are transferring. It will add up if you move large sums of money.

  • Lien on your house

A home equity loan is like a second mortgage. If you do not pay your bill on time, or if you default on the loan, the lender will place a lien on your house. The information is in the contract. Please read the fine prints.


Please take your time when combining your debt. Do the research and always read the terms of the contract. It will prevent you from getting into further debt.