Credit cards can be a blessing and a curse. While they may be effectively used to help with everyday money management, it’s easy for credit card debt to rapidly build up – particularly following unexpected changes in circumstance which prevent you from paying the whole balance off every month. If you are currently juggling multiple credit card debts, one of the quickest ways to recover is to use a debt consolidation loan.
A debt consolidation loan is a lump sum of cash that is used by a debtor to immediately pay off all individual debts, leaving just one amount owing – the amount of the loan. With all debt reduced to just one repayment each month, everyday budgeting becomes more straightforward and a new focus on full debt recovery can be given after also locking away those cards. With only one debt payment to consider each month, creating and sticking to a payment plan is more realistic and allows a borrower to truly see a debt free future ahead. Debt consolidation loans can offer much lower interest rates as well, helping you repay your debts while incurring significantly less interest charges over time. Taking on a loan with a set period of time also helps to set a defined timeline to pay off the debt completely.
Choose a debt consolidation loan from Zopa for one of the cheapest options on the market today. Zopa is a peer-to-peer lending service, or social lending service, which brings together members of the public who are happy to lend their own money to fellow peers in need. Zopa were voted Moneywise’s ‘Most Trusted Personal Loan Provider’ for the past 4 years which demonstrated others people’s trust in Zopa. You should always make a personal decision about loan companies and weigh all options before applying for a debt consolidation or any loan.
To apply for a debt consolidation loan, you no longer even need to step foot in a bank. You can carry out the entire process online. Applications are based on individual circumstance, the amount required, and a good personal credit history. There is also a calculator online which will help you easily calculate the amount you will need to repay in total, as well as what you will need to pay each month.
It’s important to note that credit card consolidation doesn’t work for everyone.
Recovering from debt in this way is only possible if you are focused on paying your repayment every month and do not plan to take on more, larger debts. This means giving up on racking up credit card debts and being careful to not take on too much additional debt until it is all paid off.
Another approach to credit card debt is the targeted approach. This consists of targeting one debt at a time, either your largest or smallest debt first.
If you don’t know where to start, speak to a financial adviser about your particular situation.
This is a guest post. Image credits: Wonderlane and 401(K) 2013.