View all posts

How to Consolidate Debt in 2020


How to Consolidate Debt in 2020

As 2020 quickly approaches, you might have already begun to set different financial goals for the new year. If you’re like most American’s struggling to pay off debt, reducing this burden may be a top resolution. Whether it’s credit card debt, high-interest loans, or other outstanding bills, debt consolidation can be a sensible solution for managing debt while saving money on interest. Learn more about how you can start taking steps to better your financial situation in the new year.

What Exactly is Debt Consolidation?

Debt consolidation is the process of rolling over consumer debt into one monthly payment to lower high interest rates, decrease the number of payments, and essentially help to eliminate debt quicker. Consumers with a total amount of debt (excluding mortgage) at or below 40% of their gross income typically have good credit, a consistent cash flow and the ability to take advantage of debt consolidation options. As a consumer it’s important to understand the benefits of debt consolidation and how it can help secure future financial success.

What are the Benefits?

  1. Save Money on Interest Rates: With growing debt and high interest rates, a debt consolidation strategy can help to alleviate some of the burden by reducing accumulated interest and possibly locking in a lower interest rate for the future.

  2. Lower Monthly Payments: By consolidating monthly bills a consumer can simplify their payments and combine their debt so there are fewer payments each month.
  3. Eliminate Debt Faster: The consolidation process can put less money towards interest and pay down the principal sooner. This is extremely beneficial when trying to successfully cut down remaining debt.

  4. Choose a Timeline: With debt consolidation a consumer can choose a loan term or balance transfer that works specifically to them. If this plan dates over the course of a year, a consumer can gain more payment flexibility.

What are Some Consolidation Options?

There are a few ways to consolidate debt and concentrate payments into one simple monthly bill. The first is to consider taking out a home equity loan. This can be used for debt consolidation and can offer competitive interest rates for several short-term or one-time needs.  While terms vary at every bank, with Citizens Savings Bank a consumer can borrow up to 80% of their home’s value, a much higher credit limit compared to a credit card. Although this might be a good option for people with a high value on their home, the risks of taking out a HELOAN or HELOC should be considered.

The second option is to take out a fixed-rate personal loan and use the money to pay off debt, with the intention to pay back the new loan installments over a set term. With repayment terms customized to fit specific financial needs and a quick decision process, Citizens Savings Bank can easily help to jump start debt consolidation with a personal loan in the new year.

Lastly, you can apply for a 0% interest balance-transfer credit card, which allows the transfer of all debt onto one card to pay the balance in full during promotional periods.

What are the Next Steps?

To find out which consolidation option is right for you, it’s best to talk to your bank about lending solutions and how to set up a long-term plan. By evaluating all your debt and which remaining debt is most important to pay off first, you can begin the process of consolidation. With a debt consolidation plan you’ll be sure to begin the new year on the right foot!

Learn More

Citizens Savings Bank has multiple locations throughout Lackawanna, Wayne, and Monroe Counties. For branch locations and hours, visit our website. We also have a Customer Support Team ready to answer any questions you may have. Call us today at 1-800-692-6279 or email [email protected]. Member FDIC.