How Much Can You Save with Debt Consolidation?

Tuesday, March 21st

How Much Can You Save with Debt Consolidation?

If you struggle with making payments to several credit cards each month, debt consolidation can be a great alternative. Simply put, a single loan is made to you, which pays off all your other loans. Then you just make a single payment to that new loan each month.

Why would you get a consolidated loan?

There are several reasons why you may love a new consolidated loan.

First, you can usually save money over the life of your loan. This is because a consolidated loan's interest rate can be much less that the interest rate charged by the credit card companies you currently pay.
Second, you typically get to keep more of your money each month. Debt consolidation companies can negotiate with creditors to reduce the amount they'll take, which means more money in your pocket.
Third, you reduce the number of payments you make each month. No more scrambling to make sure every card is paid; instead, you have just one loan payment to make.

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How much money could you really save with debt consolidation?

If you're like most people, you may be asking "But how much money can I really save?" That's a great question - and of course it depends on factors such as how much you owe, how many loans you have, and what your credit score is.

However, we discovered some real-life examples that you may find interesting. These are numbers from actual customers who utilized the services of a debt consolidation company.

Old Loan Amounts shows how much money they owed
Old Interest Rate shows the APR they were paying on their loans
New Interest Rate shows the interest rate they paid on their new consolidated loan
Money Saved shows how much money in interest they saved over the life of the loan

This proves that the money-saving benefits of debt consolidation are real!

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Financial freedom

If you're suffering under the weight of credit card bills, debt consolidation can be just the ticket to financial freedom. You can pay off your loans, save money, and lower your monthly payment all at the same time.

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Debt Consolidation Company FAQ

What is debt consolidation?

Debt consolidation is a strategy used to help consumers get control over high-interest debt and simplify their monthly payments. Instead of having multiple credit card bills and other accounts to pay, often with extremely high interest rates, debt consolidation reduces those individual debts into a single payment each month.

Is debt consolidation something I should consider? Do I qualify?

You may need to have a certain amount of unsecured debt to be accepted into a debt consolidation program (for example, $7,500 or more). If you're struggling to keep up with the minimum payments on your credit cards and loans, you could be a great candidate for debt consolidation.

Isn't debt consolidation basically taking out a loan?

That depends on the service, but yes: most debt consolidation programs give you a loan to pay off all of your outstanding debts. These loans usually have much lower interest rates and can help you get on top of your financial situation again.

Are there alternatives to debt consolidation?

Sure! You could try getting a traditional loan from your bank or credit union, borrow money from friends or family to pay off debts, or work on your side hustle to make extra cash to pay down what you owe. But, chances are good that you've tried that already and still find yourself struggling financially. Debt consolidation could help you handle it once and for all.

Will using a debt consolidation service improve my credit history?

It should. One of the biggest black marks on your credit score is having late or missed payments, and consolidating all of your debt into one monthly payment makes it more likely you'll pay on time.

How much will a debt consolidation plan cost?

That varies. Some providers don't charge anything for their services, offering counseling and other tools to teach you how to manage your money and pay down your debts. Or, if you're taking out a loan to pay off higher-interest accounts, your fees will include your interest and any other charges associated with your application. Be sure to get your plan in writing before you make a commitment, so that you'll know what to expect.

Is there a satisfaction guarantee?

Most of the time, no. If you take out a debt consolidation loan, it's on you to understand all of the terms and conditions before you sign off. However, there are a few fee-based services that do offer a 100% satisfaction guarantee that allows you to cancel without penalty.

Is debt consolidation legitimate?

Absolutely. Thousands of people use debt consolidation programs every year to tackle their toughest credit problems. It's a good idea to check out the reputation of any program you're considering: find out what other clients say about their experiences, see if the BBB has rated the company, and determine for yourself if their debt consolidation services are worth your time and (possibly) money.