Things to Know About Debt Consolidation
Share this article:
Q: Help! I’m drowning in debt! I’ve heard about debt consolidation, but what do I need to know before moving ahead?
A: Debt consolidation is the process of moving multiple high-interest debts into a new loan or line of credit.
Here’s what you need to know about debt consolidation:
What are the benefits of debt consolidation?
- Saving on interest payments. Moving your debts to a new loan or credit line with a low interest rate can translate into big savings.
- One monthly payment. Say goodbye to juggling multiple debt payments.
- Fixed payment timeline. How does knowing when you’ll be debt-free sound?
- Boost your credit score. Amp up your score with a balance transfer or loan.
What are the disadvantages of debt consolidation?
- May stretch out the payment timeline.
- You still have to practice responsible spending habits. You won’t turn into a budgeting beast just because you’ve relocated your debt.
How can I consolidate my debt with Ascend?
1. Personal Loan — This will allow you to pay off all your outstanding loans immediately and move your debts to one low-interest loan.
Personal loans at other places usually have origination fees and other charges. Also, the interest rates on these loans can be sky-high. As a member of Ascend , though, you have access to Signature loans with no fees and low interest rates.
2. Home Equity Line of Credit (HELOC) — Use your home as collateral for an open credit line.
The drawback here is that you risk losing your home if you don’t pay up. Also, repayment terms can be approximately 10 years.
On the flip side, interest payments on HELOCs can be tax-deductible. Consult your tax advisor regarding tax benefits.
3. Balance transfer — Move your debt to a new credit card with a low-interest rate.
Ascend has great credit card options with a fixed rate to help keep your monthly payment low. That will allow you to put more funds toward the debt than interest paid.
The disadvantage with putting more plastic into your purse is that you may rack up a new credit card bill and increase your debt.
Still have questions about debt consolidation? Let us help. Visit your nearest Ascend location or give us a call at 800-342-3086.