For one reason or another, you may find yourself struggling with bad debt. From high credit card interest rates to outstanding personal loans, bad debt has the ability to keep you down financially. The added money you’re paying toward interest can hinder your ability to save for the future, put money down for a home loan, or even move into a desired apartment.
To help you overcome bad debt, one of the best options is to consider a bad debt consolidation option. Consolidation allows you to combine multiple loans into a single monthly payment. This single payment not only makes it easier for you to make payments on time but it often comes with a reduced interest rate.
There are a number of debt consolidation options currently out there, so understanding the potential perks of each is important. Here are just a few of the best consolidation options out there.
Balance Transfer Credit Cards
The initial thought of opening a new credit card may not be one you like, but when you look at the potential benefits it may be the best option for you to move forward with.
As long as your credit score is high enough, you may be able to apply for a new credit card that allows for a no-interest (and often no feed) credit transfer. This means you can take the current balance you have and move it over to a card that will not charge you interest for a set period of time.
It is always important to look into the long term interest rates of the new cards, but by making such a transfer you may end up saving yourself six months to a year of interest payments. As credit cards often charge well over 10 and even 20 percent interest rates, this break in interest payments may help get you over the bad debt hump.
Home Equity Loan
If you own your own home and currently have a strong financial background, a home equity loan may be perfect. With this you’re taking a loan out with your home as collateral. You can usually take out a larger sum to pay off your bad debt, all with a far more advantageous interest rate than your current debt.
Use a Personal Loan for Your Bad Debt
With a strong credit score you may be able to secure a personal loan with a reduced interest rate. This may be a desirable option if you’d rather not use your home as possible collateral for a loan (or if you currently do not own your home).
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You Don’t Need to Live With Debt
No matter why you’ve found yourself in this problem, debt relief is available. By taking advantage of a consolidation opportunity you can reduce your monthly payments thanks to the improved interest rates. By using these repayment options you’ll have more money available every month with what you save, allowing you to pay off the debt faster. This, in turn, will help improve your financial stability moving forward.