Have you ever considered consolidating your high-interest credit card debt into a personal loan? You might be surprised at the number of reasons why you should consider doing this. Here are three reasons to consolidate debt into a personal loan today!

1. Personal Loans usually have lower interest rates

One of the main reasons people consolidate their debt is to save money on interest payments. When you consolidate debt, you are essentially taking out one loan to pay off multiple other loans. This can help you secure a lower interest rate, which can save you money in the long run.

2. Personal loans can help you get out of debt faster

Another reason to consolidate debt is that it can help you get out of debt faster. This can save you money in the long run because you’ll be paying off your debt in fewer payments.

3. Only have one monthly payment

If you’re struggling to keep up with multiple monthly payments, consolidating your debt into a personal loan can simplify your life. With a personal loan you’ll only have to make one monthly payment instead of several. It’s not easy keeping track of all the different bills and due dates each month so this can help simplify budgeting.

An example of how debt consolidation saves money

When trying to calculate how much money you could save the first step is to figure out how long it will take you to pay off your debts. To do this, you’ll need to know your total debt balance and your monthly payments for each debt. Once you have that information, you can use a debt payoff calculator to see how long it will take you to pay off your debts. A general rule of thumb is to pay more than the minimum due on all your loans, if you are able to, in order to get them paid off sooner.

Let’s go through an imaginary example. Lets say that you owe $10,000 on one credit card with a 18% interest rate and $5,000 on another credit card with an 15% interest rate and both combined charge a total of $400 in minimum payments per month.  It will take you approximately 62 months of making only the minimum payments to pay down that debt.

Now let’s see what would happen if you consolidate these debts into a personal loan with a 10% interest rate. At the same monthly repayment of $400 you would pay that loan off a year and four months faster, saving you $6,400 over the life of the loan.  If your goal is to lower your monthly payment, then you can save $85 a month by switching to a personal loan and save $5185 over the course of the loan all while still having a lower payment.

Is this the right time for me to consolidate my debt?

If you’re struggling to make monthly payments on your debt, it may be time to consider consolidating your debt into a personal loan. Doing so could help you save money on interest, simplify your monthly payments, and get out of debt faster.  If you would like to learn more, please reach out to Mark Credit today.

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