Tuesday 6 February 2018

Consolidating Your Debt is a Great Way to Kick Off 2018

Young Family with Debt Problems image from Shutterstock

We'd all like to start the New Year with no debt, and no cash worries to speak of. Unfortunately, for most of us, that simply isn't a possibility. Though it would be nice to start the new year with no interest fees to worry about, if you can't pay off your debt just in time for Christmas, that doesn't mean that you can't start 2018 in a better financial situation than you were in the year before.

Debt consolidation could be the ultimate way to bring some structure into your payments, reducing the amount of interest you need to pay over time, and potentially keeping your stress levels to a minimum too.

Here, we're going to look at just some of the reasons why a debt consolidation loan could be a great way to start the New Year!

It Moves All your Loans into a Single Payment

Paying off debt can be a serious headache, particularly when you've got money owned to various lenders, in countless different places. A debt consolidation loan simply involves using a personal loan to pay off all the other accounts that you might have taken out with other providers. This means that you can instantly get rid of all the credit cards and overdrawn bank accounts that have been haunting you over the last few years. 

With a debt consolidation loan, instead of having to worry about multiple payment deadlines and other issues, you can simply make a single payment once a month towards your debt. This should allow you to focus entirely on that singular debt so that you can pay it off much faster. Instead of wondering which account you need to pay off first, you can also ensure that you're making a dent in all the money you owe each month too.

It Keeps Your Stress to a Minimum
Who doesn't want to live a happier, more stress-free life? Debt consolidation can help you to accomplish that goal because you no longer must worry about keeping track of multiple accounts at once. When you've got multiple debts in various places it can feel far more overwhelming than having a single owed balance - even when the amount you owe is the same either way.

Consolidating your debts can help you to feel as though you have more control over your finances, and it also cuts down on the number of frustrating letters you get through the door each month reminding you of how much you owe. 

You Could Benefit from a Lower Interest Rate
Perhaps the top benefit of debt consolidation is that it allows you to stop falling victim to the high-interest rates of credit cards and badly-chosen loans. Depending on your credit score, you might find that you can choose a personal loan with a much lower APR, bringing the amount you need to pay back to an absolute minimum. A lot of people don't realise that a maxed-out credit card can cost them a lot more in the long-run than a personal loan. You can use sites like Readies.co.uk to see specifically how different loan types compare with regards to annual interest rates.

At the same time, because personal loans can be quite flexible in the right circumstances, you might also be able to spread your payments out over a longer period too. This means that you don't have to spend as much of your monthly wages on paying off your debt. Although reducing the amount you pay each month will mean that you do stay in debt for longer, this can be an easier way for some people to manage their money, particularly when you're struggling with other expenses like rents, mortgages, or utility bills. 

You Might Improve Your Credit Score 
Finally, when you're constantly making late payments on your accounts because you can't keep track of all the money you owe, your credit score takes a serious beating. This means that even if you do end up paying back everything you owe, you might struggle to convince lenders that they should let you borrow from them in the future. A consolidated loan can make it easier for you to pay back the money you owe on time so that you can begin to build your credit.

Of course, the key to success with a consolidated loan in 2018 is making sure that you choose a structure that works for you. Ensure that you don't sign up for any loans that you can't afford to pay off on time, and make sure that you read all the fine print before you agree to any terms.

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