Paying your debt can be challenging, especially during global recession. Many Americans are left unemployed or underemployed and it is causing a huge financial burden. Though this might not be the best time to become debt free, you can follow these 10 amazing debt consolidation tips to maximize your money!
Ask for low interest rates
It might come as a surprise to you, but you ask your creditors to lower the interest rate. They might agree depending on your payment history and credit score. Sometimes it can also be a permanent reduction and will help to relieve you from that burden!
Focus on high-interest debts
If possible, pause your payments on the low-interest loans. You can use these funds to pay your high interest debts. By following this strategy you can clear up your balance a lot faster!
Use a balance transfer credit card
Balance transfer credit cards are great when you want to save money and pay the balance quicker. To decrease your interest, you can use low or 0% APR balance transfer cards.
Refinance you loan
Refinancing is actually replacing your current loan with a lower rate of interest. This can happen if your credit score has improved from the time you had taken the loan or the rate of interest has dropped. This is one of the handiest tips for debt consolidation!
Instead of refinancing, sometimes modifying your existing loan can also help in relieving your financial debts. Loan modification can range from lower interest rates, low monthly payments or extension of the loan term. It is always advised to read the terms and conditions before applying for a modification.
Look for best consolidation quotes
If you have a high interest debt, you can save the interest fees by consolidating multiple balances into a low interest loan. Consider getting quotes from three lenders as this will help you to compare and get the best rates.
Improve your credit score
The better your credit score is, the better offer you will get in acquiring some low interest loans. So if your credit score is low, you can follow these tips to improve it:
- Paying within the allotted time
- Avoid taking new loans frequently
- Keep you loan balance low
Cancel small credit cards
Certain debt consolidation loans might require you to close certain credit cards to ensure you will not take up new loans and will repay the debt. Even if the program doesn’t require you to cancel your credit card, the best practice is to always cancel small credit cards to refrain yourself from using it!
Review your credit report frequently
It can be likely that you forget to repay one of your debts. So it is always advised to run a check through your credit reports to make sure that you have repaid smallest of the debts.
Try budget tracking service
When we swipe our credit cards, we go with the flow! Don’t we? It is very easy to forget that you are crossing your budget when you pay with a credit card! So to keep your budget in check, signing up for a budget tracking service can help you to keep your finances in control.
Though these tips will help you in securing a low interest or chalk out your repaying strategy, it is always advised to create a budget. Moreover you should always earn more than you spend to keep your debts in check!