Make Just One Payment for All of Your Bills

Posted by abie on 1:21 PM in
People who are trying to get out from under a mountain of debt will find it very helpful to consolidate all of their bills. Debt consolidation will not only simplify the process of making payments, it can also reduce the cost of paying back the money that is owed by reducing one's interest rates.

Many credit card accounts today will carry interest rates of 20% or more. If you can consolidate those bills into a single loan that carries an interest rate of 10%, you can save several hundred dollars a month and pay off your debt much faster. There are several different options for consolidation.

The best option right now, because mortgage rates are at record lows, is to tap into the equity you have in your house. If your credit is solid, you could refinance your mortgage and pay off your credit cards by getting an interest rate of 5% or less. If you cannot refinance your home loan, check with your bank about a home equity loan. This type of loan allows you to borrow against the equity in your home; the interest rate is not as low as a mortgage but it is still much better than what many credit card companies charge.

If you do not own a home or do not have enough equity in the home to tap into, there are other options. Banks and Credit Unions offer consolidation loans that carry interest charges which are (likely) an improvement over what you are paying on your credit cards. In addition to saving money in interest payments, you will also be switching from a revolving account to a fixed term which means that you will be paying off the debt sooner. If you have questions about consolidating your debts, a credit counseling company can be an excellent resource.


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