calculator Q: Do you know what makes up the majority of revolving debt in the U.S.?

A: Credit cards

Today, the American appetite for credit cards remains uncurbed by debt. In fact, earlier this year, total revolving debt in the U.S. topped more than $887 billion, according to the Federal Reserve – and it shows no signs of being in the black anytime soon.

For many, debt is a suffocating, scary, overwhelming, frustrating four-letter word that’s ultimately toxic enough to bring even the strongest of people to their proverbial financial knees. But, it doesn’t always have to be that way – debt shouldn’t be a monster you fear. For those looking for a solution, a debt consolidation loan may help ease your frustration and provide the peace of mind you’ve been looking for.

What Is Debt Consolidation?

“Debt consolidation is a way for you to take your high-interest credit card debt and combine it into one monthly payment,” says Quizzle.com credit expert Katie Bushor. “But, be sure to read the fine print, as sometimes there are changes to your term, which may leave you paying more in the long run.”

There are two ways to consolidate debt, balance transfers and personal loans. If you’re paying on multiple credit cards and only making the minimum payments each month, your interest is going to add up in the blink of an eye. Typically, consolidating your high-interest debt with a balance transfer or personal loan allows you to make one monthly payment, save money in interest and pay off your debts in a shorter amount of time.

What Should You Do If You Want to Apply for a Debt Consolidation Loan?

Check Your Credit

When you apply for a balance transfer or personal loan, your lender/creditor is going to check your credit report and score, so it’s a good idea to be familiar with both. Your credit helps determine the interest rate you receive on your loan. The better your credit, the higher your chances of securing the best rate.

Dispute Inaccuracies

As a consumer, you have the right to dispute any inaccuracies on your credit report. If there’s inaccurate information or something you don’t recognize on your credit report, such as a new account or late payment, dispute it with the credit reporting companies (Equifax, Experian, TransUnion). Ultimately, inaccurate information on your report may be holding you back from a better interest rate.

Pay Your Bills on Time, Every Time

Paying your bills on time, every time will help your credit. Even if you can only make the minimum payments, it’s extremely important that you make your payments on time.

Is debt consolidation right for you?

Debt consolidation isn’t right for everyone. Study up and map out your financial situation to see if a debt consolidation loan will work for you. There are many companies who offer balance transfers and personal loans, so research them to determine your best fit. You’ll also want to be sure to read the fine print – there may be fees attached to the loan you that you didn’t know about. And remember, if an offer sounds too good to be true, it probably is.

“No matter which road you choose, you need to make sure you have a game plan for how you’re going to get out of debt. You need to know where your money is going each month and make a plan to get your debt paid off in a reasonable time, while still saving for your rainy day fund,” says Katie. Common sense is your best defense.

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This Post Has 10 Comments

  1. What debt consolidation company would you refer me to? Our credit cards are already in collections but I would like to do a debt consolidation, because no one will give us a debt consolidation loan. Our credit is in low 500’s. I have a lot of equity in my home but can’t qualify for home equity loan either. Please help, thank you.

    1. Hi Brandy:

      There are no specific debt consolidation companies we work with and we aren’t really in a position to make a recommendation, but I would suggest checking out local nonprofits in your area that specializes in helping with financial planning strategies. They might be able to recommend good options in your area. Hope this helps!

  2. We would like to refinance our mortgage to lower our mortgage payments and also look into taking some cash out. Is this possible?
    Also, does the house that you want to refinance the mortgage on have to be your primary residence?

    1. Hi Catherine:

      We can absolutely look into your options to accomplish both of those things. If you would like, you can go over your options yourself through Rocket Mortgage. Otherwise, one of our Home Loan Experts would be happy to work with you if you give us a call at (888) 980-6716.

      Thanks,
      Kevin

  3. Looking for away to get rid of credit card debt. Can you help me? I already have a mortgage with Quicken loans.

    Thanks in advance,

    Joni E Redwine

    1. Hi Joni:

      I’ve removed your phone number for your privacy, but we can definitely help you look into your options. You can get a full refinance approval online through Rocket Mortgage. If you would prefer to speak with one of our home loan experts to get started, one of them will be happy to take your call at 888-728-4702.

      Thanks,
      Kevin Graham

  4. Need assistance. Cant afford credit card payments. Getting too tight. Looking for debt relief, consolidation or should a personal loan be looked at.

    1. Hi Alice:

      You’ve come to the right place. We do cash-out debt consolidation and our sister company, Rocket Loans, does personal loans. We can help you run the numbers and look into both options. Someone will be reaching out.

      Thanks,
      Kevin Graham

  5. Looking to consolidate high interest debt. Let me know if you can help. Already have our mortgage with Quicken Loans.
    Thanks

    1. Hi Sherry:

      We can certainly help you look into your options. There are a couple different routes you might be able to take. I’m going to have someone reach out and look into what’s right for you. It’s been a pleasure to serve you as a client!

      Thanks,
      Kevin Graham

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