Run the numbers, compare rates and don’t cancel those credit cards
Managing steep credit card bills and other debts every month can be stressful — and tricky. Not only do you have to keep up with all the due dates, you also need to keep track of which payments to prioritize.
If you’re struggling, you’re not alone. In fact, the average American has $38,000 in personal debt, but you have to be smart. Missed payments are the quickest way to tank your credit score and do long-term damage to your financial stability.
Debt consolidation is a smart way to avoid this by consolidating your existing debts into one new loan. This means that you’ll be paying back the interest on the new loan instead of on multiple debts and credit cards.
Here are 3 expert tips on how to be smart and consolidate your debts without letting your credit take a hit.
1. Run the numbers
Being smart means acting from a place of knowledge. Work out exactly how much debt you owe.
If you’re like most Americans, the bulk of your debt burden will be credit cards. Rather than pay five credit card bills each month, you can consolidate all those balances into a single monthly payment with a new loan.
For example, if you owe $10,000 in credit card debt at 23.99% interest rate, and you qualify
for a personal loan at 10%, you’ll save $1399 per year, or more than $100 per month, in interest by taking out a loan.
LendingTree is an online marketplace that runs the numbers for you and finds the best debt consolidation options by comparing the rates and terms of multiple lenders side by side. This ensures that you make the smartest choice for you.
2. Compare multiple lenders
Compare, compare and compare some more.
Don’t take the first offer you find - especially if it’s from your local bank or credit union.
No matter what you’ve found, with so many online lenders, there is almost always a better rate or more flexible terms waiting for you.
On GuideToLenders, you fill out one basic form with all of your information and they match you with lenders in their network. Regardless of your credit score or how much you need to borrow, they will find the right lender for you. Their comparison process is fast, easy and gives you the peace of mind of knowing that you’re not missing out on a better rate somehwere else.
3. Don’t cancel your credit cards
Once you’ve consolidated your debts, you might be tempted to cancel your credit cards. However, your credit score depends on the length of your credit history.
If you cancel your old accounts you’ll shorten your credit history and your credit score will take a hit.
5KFunds is another online marketplace that provides borrowers with competitive loan offers from vetted lenders. LendingPoint especially stands out with their expert support team that guides you along the way to make sure you don’t make a mistake like cancelling all of your old cards.
Debt consolidation can save you big and bring you closer to a debt-free future. Follow these tips you’ll make the smartest choice for you.