Posted on: Oct. 20, 2017 in Debt

For some who are carrying debt across multiple credit cards or loans, budgeting can become a nightmare. Minimum payments can get difficult to cover when there are many to pay out all over the month. If they all hit at the same time but your paycheck is still a week away, you can end up missing payments, making a bad situation worse. There are pros and cons to debt consolidation and it’s important to weigh them carefully to decide if consolidation is right for you.


One of the main benefits of debt consolidation is having only one loan. You’ll see the progress you’re making as you pay down the balance, as opposed to sending smaller payments to multiple places. This will make planning the timing of your payment simpler and easier to remember. Also, once you budget for the minimum payment, you won’t have to wonder where to send any additional funds you have – they’ll all just go to paying off this one debt.

Another benefit is that when you pay off all the smaller debts, they’ll be settled. You’ll show that you have one open loan and as long as you make those payments on time, this will help improve your score. When there’s less risk for missing payments, you’ll be in a better position to help your credit score.

When considering a consolidation loan, it’s important to shop around for the best terms possible. A longer loan term will mean a lower monthly payment, but it also means you’ll be paying it off longer and accruing interest on the outstanding balance along the way. A shorter loan term means you’ll pay less interest over all. You’ll also want to get the lowest interest rate you can since this is what is ultimately going to save you money.

But this is the part where consolidation loans get tricky: for people with bad credit, it’s sometimes hard to get the low interest rate you need to make the loan worthwhile. You must be careful to read all the terms and fully understand how your payments and possible savings will work over time. There are some organizations that can help you find bad credit consolidation loans but be sure to check them out fully before committing to anything.

Finally, understand that a debt consolidation loan doesn’t eliminate your debt, it only moves it. You are still in debt as much as, if not more so, than you were when you started, so while you may have room on your credit cards to start spending again, don’t. This will only make the hole you’re in deeper. The only way a debt consolidation will work is if you fully commit to not using your cards anymore.

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