If you've got debts following you around like a bad smell.. debt consolidation could be your secret weapon
The term ‘debt consolidation’ gets thrown around a lot.
Put simply, debt consolidation is the act of combining several loans into one new loan. It can be helpful for people who’ve got multiple debts like credit cards, personal loans or payday loans.
Let’s say you’ve got 2 credit cards and a personal loan. They all have different interest rates, repayment amounts and due dates…
By consolidating these debts, you might be able to get a single loan to cover all those debts. This means you can close out your existing debts and bundle everything together with the one lender.
It sounds pretty simple, but there are actually quite a few variables at play…
That’s why we’ve collated some of the pros and cons to help you weigh your options.
Having a single repayment can make it easier for you to create a monthly budget that slaps… and actually stick to it
The truth is, debt consolidation should only really be used as a last resort. The better way to approach your debt would be using the snowball or avalanche method to pay down debt one by one.
Having a budget and developing healthy spending habits is essential if you’re going to make consolidating your debts work for you.
Why not chat to an expert?
If you’re feeling stressed about being in debt, getting some professional advice is always a good idea. Fortunately, there are lots of free debt counselling services available in Oz. The National Debt Helpline on 1800 007 007 could be a good place to start.
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