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Think about which of the following goals is most important to you; amount you need to pay on each account.For credit card debts, your required minimum payment declines as your running balance decreases.You need a clear understanding of what you want to achieve and how it will benefit you, in order to make the right debt consolidation choice.Defining your goals is such a crucial part of choosing the right way to proceed with how to consolidate credit that we recommend that you read our separate article on debt consolidation goals.
If you’re in that kind of situation, there’s a good chance your debt will grow faster than you can pay it off.
The first is the kind you describe, where you apply for a personal loan, preferably one with a relatively low interest rate, and then use the money from that loan to pay off all your credit card balances at once.
Once all of your other accounts are paid in full, there is only one payment to make every month – the one to the new lender.
That can lead to a domino effect where you miss payments, your interest rates get raised, and then you can’t stay above water.
A consolidation loan can sometimes lower your monthly payment, and that can give you enough breathing room to get back on track.
3) Confusion because of too many bills Another common obstacle to getting out of debt is when the sheer number of bills you receive makes it hard to even keep track of which payment is due on which date. While there are some real benefits to debt consolidation, it’s extremely important that you do your homework and understand there’s a wide range of options when it comes to debt consolidation loans – some are good, some are bad, and some are downright predatory.