We are a nation of people in debt, and it does not seem to be getting better. According to data published by the Federal Reserve this February, renewable, non-mortgage credit Americans increased in December 2014 to $ 3.3 trillion, while non-revolving credit (such as student and auto loans) increased to $ 2.42 trillion, as reported by USA Today. You need student loans or carry a balance on your credit cards, the impact of debt can be felt in many areas of your life. If your debt comes from multiple sources, which can make things a lot more difficult than trying to juggle multiple payments each month. Studies published by the Urban Institute in July 2014 showed that 35% of Americans - which is roughly one in three - are so behind in their finances that they have a debt in collections. Many people become overwhelmed by their debts, but they should not be. One way to help relieve some of the strain is to consolidate debt from multiple sources.
What is debt consolidation?
Basically, debt consolidation is taking the debt that you have more than one source, as many credit cards and combines in one lump sum. This makes it easier to pay off debt because you are no longer tied to multiple payments and due dates every month. There are two main ways you can consolidate debt: Balance transfers and personal loans . what is the difference between both?
The balance transfers
If you are looking to consolidate credit card debt, a balance transfer is a great option. Balance transfers are quite simple - all you have to do is request a balance transfer once you have signed up and been approved for a new card. The trick is to look for a card that offers 0% on balance transfers for an extended period of time or reduced APRs on balance transfers. This way, you can eliminate or reduce the interest you pay by transferring your balance from one or more cards you pay a higher interest rate to one with a lower interest rate - or not at all
Should I look for 0% or reduced in April? Most cards offer a 0% introductory APR have a period of 12 to 18 months. If you do not believe you can get your debt paid within this period, it would be better to seek a card with a low APR so that you do not find you suddenly pay a higher interest rate when the 0% d 'introductory APR ends.
Which cards are best to consolidate debt? There are a number of big cards for balance transfers, but some of the best for those looking to consolidate debt include:
If you want more information about which credit card balance transfer would be best for you, our balance transfer calculator can help. Simply enter the amount you plan to transfer, how you plan to pay each month and choose your level of credit, and you'll see a list of the best transfer credit card balance options for you.
personal loans
Not all debt is credit card debt, which means that some people might be looking for an alternative to a balance transfer. Some credit card debt can be too much to transfer to another card, which is where personal loans involved. Take a loan from a bank is a long and complex process that involves a lot of paperwork and you usually need to be able to provide some sort of collateral to secure the loan. Personal loans are another option for those looking to manage their debt. These services offer competitive interest rate and unsecured loans at fixed interest rates. This may be beneficial for those looking to consolidate debt because your interest rate will not change - so you can trust that your first payment will be the same as your last. Personal loans are versatile, so you can use the money necessary to pay your debts and then repay the loan, hopefully with a smaller monthly payment and a longer repayment period.
What personal loan services are the best for debt consolidation? Due to the nature of personal loans being versatile, will work for most people looking to consolidate debt. What matters is whether you can get approved for the full amount you request and an APR that works for you.
Lending Club is a peer-to-peer lending service that provides loan process is quite different from the traditional banking experience. After submitting an application and get approved, you can post an announcement to ask for money. These demands are met by individuals and companies that lend money through Lending Club as a form of investment. Lending Club offers APRs as low as 5.99% (up 32.99%) and you can request a maximum loan amount of $ 40,000. If you do not get funded for the full amount you request, you can choose to accept what you receive or are list to try again.
Need to consolidate a significant amount of debt? Lightstream offers surprisingly low rates of interest for debt consolidation loans (from 1.99% - 11.79%) and a maximum loan amount of $ 100,000. The downside is that you must have excellent credit to borrow, but if you're just looking to consolidate debt and have an otherwise stellar credit, Lightstream is a great option.
The borrowers with bad credit to medium should turn to AvantCredit option for a personal loan. While rates may be high if your credit is not great, those looking to turn their lives around financial benefit from regular reporting on-time payments to the credit bureaus. AvantCredit offer unsecured loans to a maximum loan amount of $ 35,000 and APRs from 9.95%.
For more information on these loan services and others, read our in-depth reviews of staff ready to find out who is the best option to consolidate your debts.
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