PHOENIX, Oct. 7, 2013 /PRNewswire-iReach/ -- Many U.S. households with multiple credit cards and thousands of dollars in credit card debt are responding to the recent economic downturn by seeking ways to save money, pay off their existing debt and simplify their financial lives. They have utilized a variety of debt consolidation strategies to accomplish these three goals.
One of the preferred strategies is a personal loan with monthly installment payments. The advantage of consolidating revolving debts, such as credit cards, into one personal loan is manifold. You can save money with lower interest rates. You can pay your debt off over a specific period of time instead of having it linger by only paying the minimum payment on a credit card. Plus, you can simplify your life by only making one loan payment per month.
The key to this debt consolidation strategy is finding loans you qualify for that have lower interest rates than your credit cards and a manageable monthly payment. This way you will save money on interest charges while you also pay down your debt each month. Debt consolidation can also improve your credit score.
Once you transfer your balances to the personal loan, your credit report will show a lower percentage of debt utilization, which improves your credit score. Experts recommend that you utilize 30 percent or less of your available credit to get the best score increase. For example, if you owe $5,000 in credit card debt and consolidate it with a $5,000 loan, you now have $10,000 in available credit. But you are only utilizing $5,000 of your $10,000 ($5,000 credit card + $5,000 personal loan) or 50 percent of your available credit.
To make the most of this strategy, you need to leave you credit card accounts open and pay them off each month. As you pay down the installment loan, while leaving your credit cards open with a zero balance, your credit utilization will decrease each month and raise your credit score. Your score should improve immediately as you get to 50 percent utilization, but will climb even more when you reach 30 percent or less.
The only drawback of a debt consolidation loan comes if you get the loan and then charge your credit cards back up. If you max out your credit cards again, all you are doing is doubling your debt and this puts you in a worse financial situation. Before you use this strategy, make sure you are committed to the process of paying your credit cards off each month and making your installment payment on the consolidation loan.
Loans-payday.com has a variety of personal loans available through their website. All you have to do to find a loan is go to http://www.loans-payday.com/debt-consolidation.html fill out a brief and secure application that is sent to hundreds of lenders. Once you are approved, you can receive multiple loan offers. Then, you can review the offers and choose the one that best fits your loan consolidation strategy.
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