Debt Consolidation combines high-interest debts into one monthly payment. It decreases and reorganizes your total debt allowing you to pay it off faster. So, why should you do it? First, it’s important to know the ways in which you can consolidate your debt.
Consolidate your debt in two primary ways:
- With a 0% interest, balance-transfer credit card: All your debts would be transferred onto this card and you would pay the full balance at the time of the promotional period.
- With a fixed-rate debt consolidation loan: the loan would pay off your debt, you would set-up a payment plan to pay the loan off over a certain amount of time.
Debt consolidation isn’t the answer for everyone. There are reasons when you should do it and when you shouldn’t.
Reasons why you should:
- Your total debt without mortgage doesn’t exceed 40% of your gross income
- You qualify for 0% credit card or low-interest debt consolidation loan
- Your income covers payments towards your debt
- You don’t let yourself fall into debt again
Reasons why you shouldn’t:
- If you have a reasonable amount of debt, that’s small and easily manageable, you don’t need to consolidate. You can pay it off at the rate you’re going within 6 months to a year.
- If you have an overwhelming amount of debt that is barely able to be managed, consolidating is not for you. At this point, you may want to consider filing for bankruptcy, debt management or debt settlement.
Do you think debt consolidation is right for you? If so, we can help you get started. Apply for an Eastex VISA credit card and pay that debt off! For more information visit: https://eastexcu.org/products-services/cards/visa-credit-cards/.