The economic situation in our country is not going through its best moment. According to statistics, the number of families who cannot make ends meet, drowning in debt, has risen dangerously.
One of the formulas that can help in this difficult situation is debt consolidation . This is a resource that aims to unite all debts into a single monthly payment ; thus, you get a payment for a value lower than the sum of the debts you have, so you will have greater financial capacity at the end of the month and it is easier to save money.
For example, we could be talking about unifying personal loan payments , insurance payments, mortgages or rent, among other expenses.
The repayment period is extended and, therefore, the final cost due to interest is also extended . However, it will help us to get to the end of the month more comfortably and to get out of complicated situations. It can be a good option for those who struggle with paying multiple debts with different interest rates and terms.
In this article we are going to give you some tips that will help you consolidate debts .
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Top 5 tips for debt consolidation
1. Make a list of your debts
Before beginning the process of debt consolidation, it is important to have a clear idea of how much you owe and to whom .
To do this, make a list of your debts with their respective amounts and interest rates, and rank them in order from highest interest to lowest interest. This will help you prioritize and determine which debts are most important to pay off first.
Although you can always use a physical notepad and do it with paper and pencil, it will be much more effective to use new technologies. With a spreadsheet you can make a more complete list and update it at any time.
Thanks to mathematical formulas, you will have greater control over the totals you are paying and you will be able to understand more clearly how debt consolidation can help you save money .
Be sure to include any new expenses that appear, such as new loans, new insurance premiums, etc.
2. Find a trusted bank
Debt consolidation is a very important process, so you should choose a reliable and experienced bank.
Research several options and compare their interest rates, fees, and requirements. It’s important to choose a bank that offers a fair interest rate and doesn’t have hidden fees.
You should also keep these factors in mind when choosing a trustworthy bank :
- Security and data protection: The bank should be trustworthy and offer strong security measures to protect your data and finances . Make sure you choose a bank that uses high-security encryption and strong user authentication to protect your transactions.
- Rates and fees : It is important to compare the rates and fees of different banks and choose the one that offers the best conditions for your objectives.
- Services and features : You may need to change banks to consolidate debt, so you should also consider the features and services the bank offers, such as online banking, mobile banking, online bill payment, investing and business banking.
- Reputation and experience : Research the reputation and experience of the bank you are considering. Look for reviews and opinions online, talk to friends and family, and consider the experience other customers have had with the bank.
- Customer Service: Customer service is essential at any financial institution. Choose a bank that offers good customer service and is available to answer your questions and resolve any issues you may have.
- Proximity and accessibility : Consider the location and accessibility of the bank’s branches and ATMs. However, it is no longer necessary for the bank to be close by; thanks to online loans , we can carry out the procedure from anywhere, just by having an Internet connection.
3. Take advantage of the lowest interest rate
One of the advantages of debt consolidation is the possibility of obtaining a lower interest rate on your debts thanks to the fact that they are combined.
This may be a good time to take advantage of the lowest interest rates available in the market and reduce your overall expenses.
Considering that this can help you save a lot of money, it requires a lot of research on your part. Check out the different banks/lenders that offer you the option of debt consolidation and evaluate the interest rate.
This way you can determine if you are interested in what they offer.
4. Negotiate with your creditors
Before you consolidate your debts, you may want to talk to your creditors to see if you can negotiate better interest rates or repayment terms.
This can help you reduce your expenses and make it easier to pay off your debts.
Even if you end up having to resort to debt consolidation , if you have managed to reduce your expenses you will be able to get a better rate, which means increasing your savings capacity month after month.
5. Find out if you are interested in taking out life insurance
When you consolidate debts without a mortgage , you will have to think about what will happen to your family if something happens to you, so that you can be covered. You may be interested in taking out life insurance .
Life insurance will help you protect your loved ones and ensure that your debts will be paid off in the event of your death.
Now that you know how debt consolidation can help you , keep these 5 tips in mind and it will be easier for you to find the solution that really interests you.
