You may want to consider loan consolidation for credit card debt. Loans with lower interest rates can save you hundreds to thousands of dollars without ruining your credit. Credit cards have notoriously high rates between 15 and 30 percent or more.
You can pay off your debt faster and for less by consolidating your debt at a lower rate. For example, if you have $10,000 in credit card debt at a 20 percent rate and pay $400 a month, it would take 33 months, and you would pay more than $3,000 in interest.
On the other hand, if you have $10,000 in credit card debt at a 6 percent rate and pay $400 a month, it would take 27 months, and you would pay only $700 in interest. That is $2,300 in savings for you.
Additionally, consolidated credit cards debt means you will have fewer payments each month.
Rather than paying three or four different cards, you can lump them together and only make a single monthly payment.
The benefits of debt consolidation include:
- Turning your payments into one streamlined payment.
- You may get lower interest rates.
- You may be able to improve your credit score.
- You may be able to pay off your debt faster.
Imagine you have three accounts with a $2,000 balance on each. Instead of making three $100 payments, you could make one payment of $250 or $300.
Not only can you reduce your number of payments, but it would also lower your monthly obligations overall.