Lower payments, less interest
Depending on your situation, consolidating several high interest debts into a single lower-interest option can literally save you thousands. Credit cards often have interest rates as high as 20% or more; pay day loans are often worse because not only do they have a high interest rate, but they incur substantial service fees as well. Regardless of what type of credit it is, when we amass a large amount of high-interest debt, we often find we ourselves making only the minimum payments just to keep our head above water. We all know what happens when we only make the minimum payments, it takes forever to get out of debt. Well, maybe not forever, but a long time! A consolidation loan will offer a lower interest rate than what you will pay in revolving or other short-term debt. When you pay less interest, the net result is your payments are lower as well.
Pay debt down faster
One of the smartest strategies in debt reduction is to get rid of your most expensive debt. Even with lower payments, because you are paying a lower interest rate typically more of your payment goes to paying down the debt rather than just the interest. This means not only is your life more comfortable, but your debt is payed down significantly faster.
Make life easier
When you are only dealing with the one payment, your finances become much easier to manage. You’ll see your debt and stress levels decrease. You’ll gain confidence and control over your finances. You’ll simply feel better.