7 March 2022 | By Lending People
3 benefits of consolidating your debt instead of keeping it separate
Don’t let high interest rates or missed payments cost you time, money or cause unnecessary stress
There’s nothing worse than seeing a high interest charge on a bill, or receiving a notice that you missed a repayment you’d just completely forgotten about. It can also be easy to feel a bit downtrodden when these things occur, but it’s important to remember, there could be a better alternative.
Consolidation loans offer a way to pay off multiple debts all at once and combine them into one simple payment. These loans are designed to help streamline your finances, though sometimes people can be a little sceptical about the idea, thinking it’s too good to be true.
So, here are 3 benefits you could receive if you consolidated your debt:
- You’ll likely receive a lower interest rate When you’re paying off debt on something like a credit card (or multiple cards), you’ll likely be getting charged a higher interest rate than that on a consolidated loan. If you get a lower interest rate, can choose to either pay your consolidated loan off faster and save yourself money from interest charges, or spread the payments out over a greater period of time to help manage your finances. Either way, with a lower interest rate, you’ll likely be saving time, money or both.
- Only one payment to worry about instead of several No one has time to stare at their bank account and work out when each repayment is going to come in. All it takes is one miscalculation and you may inadvertently miss a payment because you don’t have enough in the account. But with a consolidated loan, all those multiple repayments go away, leaving you with just one, easy to manage payment.
- You could improve your credit score When you’re able to consistently make your repayments, lenders see this as a good thing. It shows them you’re a responsible borrower.
A better credit score means lenders will likely offer you better rates and deals in the future, so it’s important to manage your score as best you can. But consolidating your debt, you’re less likely to accidentally miss a repayment, which should help improve your credit score.
This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.