If you’re in debt, you may have asked yourself: “Is debt consolidation a good idea?
The different methods of debt consolidation have benefits and risks associated with each specific option, so it’s important to understand these so you can decide which way is the right way to consolidate for you.
Consolidating debt with a loan could reduce your monthly payments and provide near term relief, but a lengthier term could mean paying more in total interest.
When people mention debt consolidation, they are usually referring to one of two different methods.
The reason this can be helpful to people with a lot of debt is that it can solve three of the worst problems you face: 1) High interest rates Some types of debt (particularly credit cards) can have extremely high interest rates – up to 25% or more.
If you’re in that kind of situation, there’s a good chance your debt will grow faster than you can pay it off.