The hardest thing about credit card debt is that it can keep on growing even as you try to pay it down. Because of compounding interest month over month, new charges pile up even as you make monthly payments. It can take a long time to pay off what you owe.
That’s why debt consolidation often comes as a welcome surprise to people. It’s a way of making debt easier to eliminate by lowering the amount of interest you’ll have to pay. That means overall, you pay less in the long run and eliminate the debt faster.
One way to get a handle on growing debt: take out a debt consolidation loan.
Here’s how it works:
Bankrate.com points out that personal loans are different from credit cards in an important way: Unlike a credit card, personal loans are broken into equal monthly payments. So you can make sure the monthly amount is something you can afford without incurring more debt or fees. You never get a bill that’s larger than you’d expected.
Transferring a high-interest credit card balance to a card offering temporary zero-interest is another option that people sometimes suggest as a way to reduce debt. But this approach can be riskier than getting a fixed-rate loan.
After a few months, the zero-interest offer ends and if there is still anything owed, you’re back to paying high interest fees. There are also often transfer fees when you move debt from one card to another. So people then find themselves deeper into the debt problem they had been trying to solve.
As people look into how to reduce debt, the experts at Forbes.com offer this advice: “When shopping for a consolidation loan, take time to compare available loan terms, fees and interest rates.” It’s important to work with a lending company that gives you all the information up front and is really transparent about how things will work.
That’s the key: sitting down and talking with a lender who will look at your situation with you and fully explain how they can help. At 1st Franklin Financial, a member of our team can walk you through all the details and terms you’re offered and answer all of your questions. Unlike credit cards, our consolidation loans have fixed payments every month, with a clear payoff date.
If a debt consolidation loan is right for you, beginning the loan process is simple. You can start your application online, over the phone or at your local 1st Franklin branch.
If you’re wondering how to consolidate that stack of bills into one monthly payment, reach out to one of our locations. It’s comforting to discover that a difficult situation can be made a whole lot better through debt consolidation loans.
To find a 1st Franklin branch near you, click here.
Forbes.com information on debt consolidation (also linked above):
Bankrate information on debt consolidation: