? See if you’re eligible to use our free debt-relief tools, visit https://link.upsolve.org/DebtConsolidationHelp ?
???? Upsolve is the internet’s leading nonprofit source of financial literacy education. Nearly 3 million Americans visit Upsolve.org each year. Our services are 100% free. Here’s how we do it: https://bit.ly/howitsfree
0:30 What Is Debt Consolidation?
0:57 Debts you CAN consolidate
1:19 Debts you CAN’T consolidation
1:45 How to consolidate your debt: 2 common options
1:50 Using a personal loan to consolidate debt
2:25 Using a credit card balance transfer to consolidate debt
3:32 Pros and Cons of debt consolidation
4:45 Who will benefit most from debt consolidation?
4:58 Who debt consolidation won’t work well for
5:12 Other debt relief options
???? ? Video Recap:
???? Debt Consolidation Basics: Debt consolidation is all about streamlining your debt.
???? It involves combining multiple debts into a single, more manageable payment. Essentially, you’re refinancing your existing debts into one new loan, potentially with a lower interest rate and more favorable terms.
What kinds of debts can be included in a debt consolidation plan?
???? ???? ???? Generally, unsecured debts like credit card balances, personal loans, and medical bills can be consolidated.
You can also consolidate your federal student loan debt, but you’ll need to do that through your student loan servicer.
LEARN HOW ?? https://link.upsolve.org/consolidatestudentloans
? What types of debt can’t be consolidated?
You can’t consolidate car loans, mortgages, or other types of secured debt (debt that’s backed by collateral). However, you may be able to refinance this debt to get a lower interest rate or monthly payment, if needed.
???? How do you consolidate debt? (2 Options)
???? 1. Take out a personal loan to pay off your existing debts in 2-7 years (terms vary by lender). You need to have good credit to get a loan with a lower interest rate than your current debt.
???? You may have to pay a loan origination fee.
???? 2. Credit card balance transfer, where you move balances from high-interest credit cards to one with a lower interest rate or with a 0% introductory interest rate. You’ll need to have a decent credit score and be prepared to repay the debt you transfer to the card within 12-18 months– or however long the 0% interest period is.
???? You usually have to pay a credit card balance transfer fee.
What are the pros of debt consolidation?
? It can simplify your finances by combining multiple payments into one.
? If you get a lower interest rate, you’ll save money in the long run.
? It can help you get organized and stay on track with your payments.
What are the cons of debt consolidation?
? You need to have a good credit score to get a good interest rate on a debt consolidation loan or to do a balance transfer to a credit card with 0% introductory APR.
? You may end up paying more money in the long run if the repayment term is too long, even if your interest rate is lower.
? If you use a secured loan for consolidation, you’re putting collateral at risk
? If you do a credit card balance transfer, you’re usually working on a limited timeline. If you can’t repay the debt within the promotion APR period, you may end up right back where you started.
So, who stands to benefit the most from debt consolidation?
????If you’re looking for a way to simplify your debt repayment, you have a good credit score and you mostly have high-interest credit card debt, debt consolidation could be a great option for you.
???? If you don’t have great credit, you need a quick solution to your debt, or you aren’t sure you can stick with the debt repayment terms, debt consolidation may not be your best option. In this case, it may be a good idea to look into debt settlement, a debt management plan, or Chapter 7 bankruptcy.
None of the options will be good until the reason for the original balances were accumulated in the first place.
You can't borrow your way out of Debt. Only one strategy works Deciplned Snowball the Debts.
Smallest first then attack the others.