What is Debt Consolidation? – Magnify Money
- June 4, 2018
- By: Greenpath Financial Wellness
Dealing with multiple personal debts might feel a lot like playing whack-a-mole – different bills with different due dates, minimum balances and late fines and penalties. Just when you’ve sent in one payment, another bill pops up. At Magnify Money, we understand that it’s easy for people to get behind.
Debt consolidation can help by essentially rolling all your debt payments, like credit card bills, into one with a single due date and a fixed interest rate that is typically lower, depending on your credit score.
Sounds easy right? While debt consolidation does provide a bevy of benefits, it does have its pitfalls if one isn’t careful. But don’t fret, we here at MagnifyMoney got your back!
A key component to debt consolidation is rolling all monthly payments into one. There are two primary ways to concentrate debt payments into one bill: transferring the debt to a 0% balance transfer credit card, or a debt consolidation loan.
Your credit score is a big determining factor as to which of the two options you should choose. If you have a credit score of 700 or higher it’s probably better to consider a balance transfer credit card. We will talk about balance transfers further down.
If you have a credit score below 700, which is common with someone dealing with a good amount of credit card debt, a debt consolidation loan is right up your alley. Let’s jump into learning exactly what a debt consolidation loan really is!