Many Americans experience credit card debt, which is often crippling because they see no end in sight. This leads to people wondering if debt consolidation is the right option for them. Debt consolidation is the financial process of taking multiple debts (credit cards, medical bills, loans, etc.) and consolidating them into one single and more affordable payment. This helps pay off the debt sooner—without breaking your budget!
We’re discussing debt consolidation and whether you should consolidate your credit cards with an experienced debt consolidation agent in this guide from the financial experts at Symple Lending.
How Does Debt Consolidation Work?
You can consolidate your debt one of two ways, with your credit score and debt-to-income ratio in mind, when deciding:
A fixed-rate debt consolidation loan takes the money from the loan to pay off the debt you’re consolidating. In return, you will pay back the borrower each month over a set term. Those with a credit score below 689 can still qualify, but those with higher scores often receive lower interest rates.
A zero percent, balance-transfer credit card allows you to transfer your debt to this credit card. The balance, however, must be paid off within the promotional period to take advantage of having a break with the interest rate. To qualify, you most likely need a score of 690 or higher.
Not sure which is right for you? At Symple Lending, our team of experts can help answer your questions and provide quality financial advice.
Should I Consolidate My Debt?
Debt consolidation works best for those in the following situations:
- Your monthly payments (mortgage and rent included) are less than 50% of your monthly gross income.
- You have a strong credit score and qualify for lower interest rates.
- You can afford to cover the monthly payments
- You have the finances to pay off your debt in five years.
Will Debt Consolidation Hurt My Credit?
As long as your payments are made on time, consolidating your credit score will improve. However, you mustn’t run up your cards’ balances again.
When Shouldn’t I Consider Consolidating My Debt?
While debt consolidation works for many people, there are cases when this isn’t the best option. If you answer yes to the following, this may not be the right choice:
- The debt is small and can be paid off within a year at your current pace.
- Your total debt is more than half your income. In this case, it may be worth considering debt relief.
Learn More About Debt Consolidation With Symple Lending
When you’re ready to speak with an experienced debt consolidation agent, don’t hesitate to reach out to our team at Symple Lending. We’ll answer your questions and help you decide which consolidation works best for your budget and needs.
