Consolidating multiple debts into one can also help your credit score and debt repayment strategy in three ways:
- You can pay off higher interest revolving debt accounts, thereby reducing your utilization ratio
- You can also possibly save substantially on high interest charges with a lower rate loan
- You’ll have one set payment amount with a clear end date
Consolidating your debt allows you to turn multiple payments into one. And, depending on your credit history and the lender, you may get a better APR than what you’re currently paying.
Debt consolidation can be done with a personal loan or a balance transfer credit card.
You can find personal loans from banks, credit unions and online lenders — and by signing up for a free LendingTree account, you can comparison-shop loans from a variety of lenders.
Once approved, your new lender may send funds to your creditors or to you directly to apply toward your debts.
With a balance transfer credit card, you’ll apply for a new credit card offering an introductory 0% APR period on balance transfers, then request a transfer of debt from your old account or accounts to the new card. Note that you can’t transfer debt between cards from the same issuer, and also be aware you’ll likely be charged a fee of 3% to 5% of the amount transferred.
Balance transfer 0% intro deals can run from six to 21 months, and any remaining balance will be subject to the ongoing APR. Personal loan terms, on the other hand, give you anywhere from two to five years in which to repay.
Source: on 2020-10-30 23:22:30
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