5 Debt Consolidation Tips to Get You Started

Dealing with multiple credit card debts is daunting as it is. Not only do you have several payment deadlines and large repayment amounts to manage, you also face the risk of dealing with late charges and extra fees on a regular basis. Let’s not forget that credit cards carry high interest rates compared to other financing options, making it easier for you to accumulate large fees in no time.

For those struggling with their credit card debts, debt consolidation is an option worth considering. Rather than struggling to repay multiple loans, you will have one fixed repayment amount to deal with once the debts are consolidated. Before you go ahead and start searching for a consolidation loan to use, however, there are several important things to understand first.

List Everything

If you are going to use debt consolidation as a solution, you want to list all of the credit card debts you are now dealing with; leave nothing behind. It is a big move to make and it is certainly a move you want to make to solve all of your problems.

While listing the debts you need to repay, be sure to include details such as the interest rate, the actual cost of the debt (including interest, admin fee, and other charges), the principal amount, and the due date each month.

The comprehensive list will act as your guide. When comparing consolidation loans or reviewing your options, for example, you can use the list of debts to see if you are saving money by consolidating your credit card bills.

Look for Balance Transfers

Another step you want to take before consolidating your credit card debts is searching for balance transfer deals. Credit card companies now offer balance transfer programs that let you move your credit card debt from one company to the other.

What’s great about these programs is the lower interest rate you get to enjoy. The introductory interest rate can be as low as 0% – yes, no interest to worry about – while the normal interest rate is usually lower than your existing credit cards.

You can transfer multiple credit cards using one balance transfer program as long as the new card’s limit allows you to combine multiple debts. Before you do, make sure the fees and additional charges don’t eat too much into the money you save on interest and regular fees.

Check Your Credit History

Before searching for consolidation loans, take the time to review your credit history. It may not be possible to improve your credit score in such a short amount of time, but you can still optimize your score by reviewing items in your credit history.

If there are inaccurate entries in your credit history, get them adjusted accordingly. Getting one debt you repaid a year ago removed from the credit history could lead to a substantial improvement in your credit score. Small inaccuracies are worth pursuing as well.

By reviewing your credit score and history, you are preparing yourself for the consolidation loan. Good credit score means low-interest consolidation loan, allowing you to save even more money in the long run. It is clearly a preparation worth making.

Compare Consolidation Loans

Next, make sure you compare the available consolidation loans and programs that can help you land the best deal thoroughly. The latter is worth exploring for two reasons. First, pre-designed programs are meant to help you be debt-free at the end of the term, so all you need to do is follow the program of your choice every step of the way.

The second reason is the vast network supporting popular debt consolidation programs. You will get the help you need as you negotiate the settlement of your credit card debts, find the right consolidation loan to use, and completely repay the consolidation loan in the desired time.

You can also choose to do everything yourself. Naturally, this will allow you to save more money in general, especially since you don’t need to pay fees to the program. You can still contact your credit card companies and negotiate better settlement deals yourself.

Stop Using Your Credit Cards

One last tip to keep in mind when you want to consolidate your credit card debts: close your consolidated credit cards immediately. Forget about using the cards for future purchases; this will only lead to more problems in the future.

In fact, you should stop using credit cards altogether. Keep one credit card with the lowest interest rate and fees for emergencies and get rid of everything else. Focus on repaying the consolidation loan as quickly as possible.

At the end of the process, you will regain control over your personal finance. Once you don’t have multiple credit card debts to repay, you can start saving more money, investing in more instruments, and generating additional income. You’ll be surprised by how quickly you can return to a healthy cash flow with your debts consolidated and managed properly.

Smart Ways to Be More Responsible with Your Use of Loans

There are plenty of financing options you can now turn to whenever you need the extra money. Whether you are buying your first house or trying to cope with financial emergencies, you can always find a suitable loan to take out. There are even loans designed to help you get the money you need within hours.

The presence of more financing options should not prevent you from being responsible with the loans you do use. Rather than taking out more loans just because you can, you have to be wiser with how you use financing options as part of your personal finance strategy. To help you get started with responsible borrowing, here are the top tips and tricks to keep in mind.

Get to Know Your Lenders

Working with the best lenders is a must. When you engage a good lender, you know you get a more transparent cost structure, a better deal in general, and sufficient support throughout the term of the loan. Even when you run into issues trying to repay the loan, the lender will work with you in getting the debt repaid in the easiest way possible.

Good lenders are easier to spot. There are some red flags you want to avoid when comparing loans from multiple lenders, and hidden fees are at the top of that list things to avoid. You also want to keep an eye for origination fees, which are getting more common among the shadier lenders.

Don’t forget that you also have the internet on your side as you look into different lenders on the market. There are reviews and testimonials of past customers to go through; reading them should give you a clearer view of what to expect from the lender. Even reviews for the individual loans are now widely available, complete with calculations and other necessary details.

Compare Your Options

It is never a good idea to go for the first loan you come across, even when you are dealing with an emergency. As mentioned before, you now have more options than ever. All it takes for you to discover many deals to compare is the right web tool to use.

Using the right tool, you can find quotes from multiple lenders in one click. Once you have the quotes and the details that come with them, comparing loans becomes incredibly easy. You can use metrics like the total payable or representative APRs to find the best deal available.

You can even use calculators and similar tools to compare different financing options. For example, you can see if it is more affordable to take out a short-term loan when you have a gap in your monthly budget. The best financing option is always a couple of clicks – or taps – away.

Review Your Personal Financial State

Every new loan you take out adds a predetermined repayment amount you need to take into account. Before applying for the loan, you have to be extra certain that you can afford the loan repayment amount. This means reviewing your personal financial state and checking if the loan is well within your monthly budget.

Ideally, you want all loan repayments to consume no more than 30%of your income. This, of course, isn’t always possible, but it is worth noting that spending more than 30% of your income on debt repayments is a risky financial move to make.

At the very least, you need to be certain that taking out the loan will not disrupt your monthly budget for months to come. You may have to make some adjustments and cut unnecessary expenses, but these things are doable. When you do have the monthly repayment amount in hand, calculate to see if you can repay the loan smoothly.

Read the Fine Print

One last thing to keep in mind about borrowing responsibly: always know what you are getting into. Before signing the loan agreement, read the agreement thoroughly and make sure you understand every point in it. The agreement must include details about the fees associated with the loan, terms of the loan and its repayment, and even options you can consider should you cannot repay the loan.

The more you understand the agreement, the better you can prepare for the loan and the process of repaying it. Don’t hesitate to ask questions about any term you don’t understand. In some cases, you can even ask for changes to be made before signing the loan agreement.

What if you don’t like the terms of the loan. Well, there are other loans you can take out. There are indeed so many financing options to choose from right now, so don’t hesitate to find one that suits your needs and personal preferences perfectly. With the tips in this article, you can be more responsible with the loans you use for various purposes.