Why You Should Consolidate Your Debt with a Bill Consolidation Loan
Fortunately, there’s a way to simplify your finances and lower your interest rates with a PenFed Bill Consolidation Loan. With a PenFed Bill Consolidation Loan, you get a single, fixed-rate loan which you can use to pay off your debt faster. By consolidating, you’ll pay off your other debts while paying a single monthly bill for the consolidation loan. Not having to keep track of multiple bills can make it a lot easier to manage your finances.
But beyond streamlining your finances, there are a lot of reasons a consolidation loan can be better than keeping your current debt:
- Credit Card interest rates may vary, and if you’re late on a payment, the lender may increase the rate due to the lateness, and then you are stuck paying higher rates for months. By consolidating, you’re likely to get a lower rate which will save you money as you pay down your debt. The consolidation loan has a fixed rate, meaning the interest rate will stay the same over the life of the loan and there is no prepayment penalty.
- You may be able to get a lower monthly payment. This can help manage your monthly budget while still paying down your debt.
- Moving debt from credit cards to a loan can help your credit score. If your credit card debt is close to your maximum available credit this could have negative impact on your credit score. Consolidating revolving debt into a loan will help increase your score—meaning it will be easier to qualify for better loan and credit card deals in the future.
- A consolidation loan is a fairly straightforward way to consolidate your debt, as collateral is not used to secure your financing.
- Improve your monthly cash flow by consolidating several monthly payments into one payment at a lower rate.
PenFed’s Bill Consolidation Loans have a fixed rate as low as 9.99%* APR, which is much better than the current average credit card APR of 15.74%. This means you have the flexibility to decide whether you want to pay down your debt more quickly or whether you need lower monthly payments to make your budget work.
So how should you get started with a bill consolidation loan?
The first step is to take stock of your current debt. Make a list of the debts you’d like to consolidate and the interest rates on each debt. The more you owe and the higher your interest rates, the more a bill consolidation loan might be the best financial move.
However, once you’ve gotten your loan, remember that consolidating your debt is only part of improving your finances. While a bill consolidation loan will help you manage your debt, it is important that you do not start obtaining new debt especially revolving debt. Take the time to make a budget and start saving for emergency expenses so an unexpected bill doesn’t mean financial disaster.