As many people in America continue to slip slowly into debt, ordinary consumers have to be wary of experiencing a similar fate. According to Federal Reserve findings (July 2014), American households have an average of 3.75 credit cards with a combined average of $19,000 of approved credit limit. With an average salary of $52,000 (US Census Bureau) per household, many consumers have the potential of running their consumer debt to over 36% of annual income. After factoring in mortgages, auto loans and student loans, the potential for financial disaster seems far too high.
What Should You Do If Debt Becomes a Problem?
The best thing you can do prevent financial hardship is to stay aware of your financial situation. If debt starts to accumulate to uncomfortable levels, there are several ways to head off impending disaster. One such way is by consolidating your debt. Debt consolidation loans are available for qualified borrowers who need the opportunity to reorganize their debt in order to properly facilitate honoring of said debt.
Will Debt Consolidation Help Me?
In order to determine the feasibility of a debt consolidation loan, there are several things you will need to consider. These types of loans are not particularly easy to get and they are not always appropriate for every situation where debt problems exist. With that in mind, there are several situations that might make this a good solution.
1. Too Many Creditors – If you are paying too many bills on a monthly basis, you are probably feeling overwhelmed when it comes time to pull out the checkbook. This really becomes a factor if late payments start to pile up, which prompts creditors to start calling. A debt consolidation loan is a great way to roll all these payments into a single payment with a single lender.
2. Paying too Much in Interest – If much of your debt, especially credit card debt, carries high interest rates, a debt consolidation loan may afford you the opportunity to significantly lower your aggregate effective interest rate. By doing so, you can save yourself a lot of money and slow down the accumulation of debt related to interest charges. It might also in the lowering of your overall payment, making your monthly cash outflow a little easier to handle.
3. The Risk of Credit Score Issues – As you start to experience late payments, you run the risk of hurting your credit score, which diminishes your future access to credit in case of emergencies. A debt consolidation loan can be used to payoff problem accounts before they adversely affect your credit score.
If you can qualify for the loan and resolve one or more of these situations, then yes, a debt consolidation loan can help you. If you would like more information or assistance on securing this type of loan, you can contact one of our professional debt counselors here at Rescue One Financial. They are ready to serve you and offer the best possible advice when you are looking to find financial stability.