March 31st, 2020

Should I Consolidate My Debt?

Exactly what is a debt consolidation loan?  Do you need one? Will it really help reduce your debt? It is fairly common that offers for debt consolidation roll in at the beginning of the year.  After all, billions of dollars are spent during the holiday season and much of that goes on our credit cards. But debt consolidation isn’t a strategy limited to addressing excessive holiday spending.

So what is a debt consolidation loan? It is essentially an unsecured loan used to consolidate unsecured credit, primarily credit cards.  And the rate on the loan is often much lower than what you’ll find on almost any credit card.  So why wouldn’t you consolidate your credit cards into a consolidation loan?  There are a couple of things you should know about debt consolidation.  First, like any type of credit, the rate you’ll receive is based in large part on your credit score.  Second, unlike a credit card, where you can make a very minimum payment (sometimes not much more than the interest that is accruing), you will be paying off the entire loan in a specified period of time.  But that’s actually a very GOOD thing if you really want to reduce your debt.  You’ll likely end up saving a considerable amount in interest, both because the interest rate should be lower AND because you’ll be paying the debt off faster.

So do you need a consolidation loan?  Contact Cornerstone at 385-6866 to find out if this option can save you money.


Category: Understanding Credit

Tags: , ,