How to Save Your Money With Debt Consolidation

By Cornie Herring

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As you know standard credit card changes 18% of interest rate, unless you have not owed any credit card debt, this percentage means a lot to you especially if you just paying the minimum due of your monthly balance, the higher the number, the more interests you need to pay for your credit card debt. Unless you can clear your debt in one time payment, else you need to find way to reduce your credit card interest rate so that you pay less interest and more money will goes to your balance for faster debt relief. Debt consolidation can be one of your options to help you save your money and get rid of debt faster.

Let's see how interest impacts your total payment and the time need to clear off your credit card debt:

You have 3 credit cards, each card balances are $10,000, $5,000 and $15,000 with interest rate of 18%, 16%, 18%. The minimum allowable payment is 3% or $10, whichever is higher.

For easy calculation, we assume you are paying $300, $150 and $450 constantly every month to each of your credit card payment and you do not add extra debt into your current total debt. With these assumptions and based on the interest of each card, it will takes you 47 months and a total of $42,000 to pay off your $30,000 debt.

If you manage to get a $30,000 loan with interest rate of 8% to pay off your existing debt and you repay this loan with your month affordability at $900 per month. It will take you 39 months and a total of $35,100 to pay off your $30,000 loan. By using this method, you are saving about $7,000 in interest and relief from debt 8 months faster. The process of getting a loan to repay your existing combined debt is called debt consolidation with a consolidation loan. There are many good debt consolidation packages in the market that you can utilize to manage your debt and work out to free yourself from debt.

Debt consolidation can be DIY. You can consolidate all your existing debt and calculate your total debts to be pay off. Then, search from your local banks or internet for consolidation loan package that has the best interest rate with the term and condition that meet your financial situation. Then, request for more details information for further review and short listed your choices and make appointment with the consultant for further clarification and get all your questions answered before you decide which package to sign up.

If you have collateral such as home or other asset that can be pledged to get secured debt consolidation loan, then, you should be able to get a better loan package with lower interest rate which can save more money. But, you must be aware that if you default the consolidation loan, you will loss your home / assets. Hence, you must be discipline enough to repay your loan constantly until you finish your loan repayment.

Summary

Debt consolidation with a consolidation loan can be your option to bring all your debts into a manageable level and save you some money in term of interest while you work your way out of debt.

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About The Author
Cornie Herring is an finance author of www.debt-consolidation-1stop.info, an informative website that provides FREE information and guides on debt consolidation, debt management & bankruptcy alternatives.