Debt Consolidation - Four Strategies To Consolidate Debt

By Author: Cornie Herring
Total Articles: 3
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Although debt consolidation is simple process to combine high interest rate debts into one account, it may not be an easy task for people who have bad credit. Luckily, there are a few debt consolidation options for people in need of debt relief from the overwhelming debt burden.

Regardless of the purposes you have defined for debt consolidation, the overall goal should include the reduced of total cost after consolidation multiple accounts into a loan. The strategies below you guide you through the process and get the most benefit from the solution:

Strategy #1: Look for the lowest interest rates you possibly can

Consolidation loans are not equal. The rates and fees are dependent on your credit score and the lenders' promotions. Although it might be harder for you to get the best interest rate consolidation loan if you have averagely poor credit rating, but there are still many good loans available that you can use to consolidate debt. So, don't stop your search for the best loan if you have not found one. You may need to spend some time and put more efforts to get more loan details from different lenders ...
... and compare them apple to apple. Keep on the searching process until you find the best debt consolidation that meets your requirements.

Strategy #2: Sort debt from the highest interest, the largest balances to the lowest and priority the debts at the top of the list

The best strategy to stop the harassing phone calls from creditors is to pay them off through the debt consolidation. Depending on your credit score and your income capability, the lender may not approve the loan amount you apply for. High interest rate credit accounts will cause you to pay more, so you should prioritize these accounts and get those eliminated in debt consolidation if you can get an approved consolidation loan to pay off all accounts. That's why when you compile the list of debt you should sort them in ascending order from the largest balance with the highest interest rate to the lowest. Then, prioritize the consolidation for the account in the top of the list.

Strategy #3: Make the same amount of monthly payment

Generally, the consolidation has low interest rate than most credit types, so the monthly payment will be reduced after the debt consolidation. If your current monthly payment is comfortable, you should keep the amount that paid to the debt to the consolidation loan repayment so that you will pay off the loan faster and pay less in interest.

Strategy #4: Use auto payment to make sure you make the monthly payment on time

You should be able to get rid of most expensive credit card debts and personal loans after the consolidation. You will only have one repayment each month if you manage to consolidate all credit accounts. Or, the number of accounts should be fewer than before the consolidation even though you are unable to cover all accounts. Although the chances of miss or late payments can be reduced because it is easier to manage small number of accounts, but the risk still remains. The best way of on time payment is by setting standing instructions at your bank accounts for auto pay the loan repayment.

Summary

If you follow the 4 strategies above to consolidate debt, you are able to reduce the total cost and get rid of credit card debt faster.

Cornie Herring is a finance expert and author forhttp://www.debtconsolidationmakeeasy.com. Visit her website to learn about debt consolidation and find the best way to consolidate credit card debt.