Is Debt Consolidation Right for You?

Whether you’re carrying multiple credit cards, paying a lot in interest, or simply have too many debts to keep track of, there are many reasons why debt consolidation could be an option worth checking into.

Lower interest rate

Many debt consolidation loan companies offer interest rates much lower than credit cards and traditional loans, giving consumers a way to pay off debt and save money in interest. Many of the leading personal loan companies offer fixed rates ranging from 5.99% to $29.99%, depending on credit worthiness. One of our top picks is newcomer Best Egg®. Its website offers this example to show just how much customers can save over the life of a debt consolidation loan:

Best Egg Debt Consolidation Loan Chart

Lower combined monthly payment

Another important benefit of debt consolidation is a more manageable monthly payment. With lower interest rates come lower payments, which can be much more budget friendly. Plus, paying less each month can give you a little extra cash at the end of the month to put toward your savings.

Only one payment due date to remember

Even those of us who are responsible with how we manage our debt can fall behind on payments simply because there are too many payment due dates to remember. By streamlining your bills into one fixed monthly payment, you can stop juggling due dates, making it easier to pay your bills on time.

Fixed repayment schedule

When you’re trying to get rid of debt, it helps knowing that there’s a definite date when your loan will be repaid. Revolving credit card accounts are just that – revolving. With many personal debt consolidation loans you can choose to repay your loan in 3 years or 5 years – a few offer even more flexible repayment terms. That gives you a clear plan for getting rid of the debt in the timeframe you choose.

There are numerous benefits to consolidating your debt with a low-interest personal loan. These three companies are our picks for best debt consolidation loans:

#1 Best Egg (MyBestEgg.com)

#2 Prosper (Prosper.com)

#3 Lending Club (LendingClub.com)

best egg account savings detail table

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2 Comments

  • Ellen O'Rourke says:

    But doesn’t debt consolidation affect your credit score?

    • Rob Heck says:

      Yes, paying off your debt can boost your credit score. Consolidating your debt into one monthly payment with a lower interest rate is the best way to pay off your higher-interest rate cards in as little as 36 months. Best Egg has seen their borrowers increase their credit scores by an average of 21 points after obtaining their loan paying off revolving debt.

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