Debt consolidation involves combining two or more outstanding debts into one. It is the preferred option for many people to get out of debt for various reasons that we share below.
Simpler payments
For some people it can be overwhelming to make Keep track of payment due dates when you owe multiple creditors. But when you consolidate those outstanding debts into a loan or credit card product, you’ll only make one payment to a single creditor each month. This minimizes the chances of making late payments that result in excessive charges or damage to your credit score.
Low interest rates
Consumers with good or excellent credit scores generally qualify for competitive interest rates on consolidation loans debt
For example, as of 15 November 2022, the average interest rate for credit cards was 25.15. By comparison, loan rates for borrowers with excellent credit ranged between 10.3% and 13.5%, as reported on Bankrate.
Even if you have good credit, not necessarily great, the average rate is between the 13.5% and the 15.5%, which is lower than that found with most credit cards.
This is important, because the less you pay in interest, the higher the amount will be applied to principal balances each month, making it easier to get out of debt faster.
Best Credit Score
Although it is true that when you request a debt consolidation your credit score may drop a few points, even so, you could have a better score as you make your payment.
When you make timely payments on your consolidation loan Debt or credit card dation, a positive payment history is added to your credit report. Payment history represents 25% of your credit score, so you’ll likely see an increase over time.
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