Credit Union Blog

Financial Tip: Consolidate your high interest debt and save with a better personal loan.

June 12th, 2019 by Catherine James

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Combine your debt into a single loan with a lower rate and payment. 

If you are like most Americans you have some combination of car loans, credit cards, medical debt, mortgage loans, student loans, and personal loans – each with different interest rates, due dates and finance charges. It can be overwhelming to stay on top of finances with so many variables each month. Consolidating your debt to a single, fixed rate and payment is a good way to reduce the variables, control your cash flow, and possibly save money. 

Debt or bill consolidation is the process of combining multiple debts from credit cards, high interest loans, and other bills into one loan with one monthly payment. Debt consolidation solutions may lower your interest rate which can help you save money on interest and lower your monthly payments. 

First Step: Decide which debt payments you want eliminate and which creditors to pay off. 

Not all debt is created equal. Some debt, such as mortgages, offers multiple long-term benefits with lower rates and lengthy payment terms. But, high interest debt from credit cards and unsecured loans can be very costly as the interest and finance charges continue to add up, especially when multiplied over several creditors. This high interest debt can take years to pay off and can accrue more interest than the initial principal. 

Identify and calculate what you pay in high interest debt each month and then compare the savings to a fixed-rate, fixed-term debt consolidation loan. With this type of loan, you choose the amount you need and the repayment term. Your consolidation loan is used to pay off your high interest debt, and then you make regular monthly payments to pay off the loan by a specific date. In many instances you can get a better rate with this type of loan than you had on those high interest credit cards and loans, which could mean lower monthly payments. 

Next Step: Ask for guidance from the experts at your credit union. 

Your credit union is one of the best resources to help you consolidate and pay off your debt. Because we are not-for-profit, our members have access to lower loan rates and fewer fees. We provide personalized, flexible solutions that can help reduce your rates and possibly your monthly payments. Plus, we handle paying off each creditor so that you don’t have to. Our lenders make decisions locally – right here in Greenville – and our goal is help you find the smartest ways to save money and simplify your finances. 

Come by or contact us to learn more about how we can help. Learn about personal loans here.