Tips for Financial Freedom: Consolidate Debt with Personal Loans

Norm Plumstead

 

is just a wish

The next time you need cash, just write yourself a loan. All you need is a Redi-Money Line-of-Credit from Honor Bank. It’s our unsecured personal line of credit. Once you are approved, we will give you a book of checks. Then, you can activate your credit line by writing one of these checks any time you need cash. Your check looks like any other personal check.

You can use our Redi-Money Line-of-Credit when consolidating debt. Personal unsecured loans can also be used to consolidate high-interest credit card debt. Put all of your credit card debt into one payment at a lower interest rate and accelerate debt payoff.

So what is the first step to secure a Redi-Money Line-of-Credit?

Start by making a list of your loan and credit card balances, with the interest rate and monthly payment for each. Consider your consolidation options – both secured and unsecured: Both secured and unsecured loans allow you to use your good credit to consolidate multiple debts into a single loan with one monthly payment. Secured loans require collateral and therefore usually have a lower interest rate. Unsecured loans usually will not require collateral and may have a higher interest rate. Either way, these loans are better options for consolidating debt. Never use a payday lender for a personal loan.

Personal unsecured loans are popular. You can merge credit card debt and improve your credit score for several reasons: These loans won't hurt your credit score as much as debt on a credit card that's almost to its limit. This approach makes available credit more accessible.

Personal unsecured loans will carry the biggest benefit if you’re currently paying high interest rates on scattered accounts.

Here’s why:

  • Lower interest rate — if you can lower your interest rate by at least two percent, a personal loan could save you quite a bit of money in interest charges.
  • Single payment — if you hold debt on multiple credit cards, and you consolidate this debt through a personal loan, you’ll simplify your debt payoff. Making one payment, rather than several, could help keep you on-track and organized with your bill payments.
  • Quicker debt pay-off — if you only have one debt payment every month, with one fixed interest rate, you may be able to pay off your loans on a shorter timeline and save money.

One potential drawback: you will need to change your habits so you can avoid digging yourself into credit card debt in the future. This requires spending less, watching your budget carefully, and perhaps earning extra money on the side.

Unless you radically change your spending practices, you may want to stay clear of a personal loan. A personal loan, at best, might act as a Band-Aid. At worst, it may add more fuel to the fire by allowing you to start racking up credit card balances again.

Your goal in consolidation should always be to get the lowest interest rate possible. Consolidating loans affects credit. Let the experts at Honor Bank help you find the option that’s right for you. Let’s get you closer to financial freedom by consolidating your debt. For a convenient time to visit and a location near you see https://www.myhonorbank.com/hours-locations.

 Learn more about Kasasa Saver

 

*All loans are subject to credit approval.

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