What do you Need to Know About Debt Consolidation?

Debt consolidation is the process of moving multiple high-interest debts into a new loan or line of credit.

Here’s what we think you need to know about debt consolidation.

Benefits of debt consolidation

• Saving on interest payments. Moving your debts to a new loan or credit line with a low interest rate can translate into big savings.
• One monthly payment. Say goodbye to scrambling to keep track of and make all your monthly payments!
• Fixed payment timeline. How does knowing when you’ll be debt-free sound?
• Boost your credit score. Amp up your score with a balance transfer or loan.

Disadvantages of debt consolidation

• May stretch out the payment timeline. More time in debt? No thanks.
• Won’t eliminate irresponsible spending habits. You won’t turn into a budgeting beast just because you’ve relocated your debt.
• Lower interest rate may not last. Many low or no interest credit cards only offer these features as a temporary promotion. Once time is up, the high interest rates hit. Ouch!

This is how you can consolidate debt

1. Personal or unsecured loan >> This type of loan will allow you to pay off all your outstanding loans immediately and move your debts to one low interest loan. Personal or unsecured loans usually have origination fees and other charges. Also, the interest rates on these loans can be sky-high. As a member of OE Federal, you have access to personal or unsecured loans with no origination fees and low interest rates. Click here to learn more about our Personal Loans.
2. Home Equity Line of Credit (HELOC) >> You can use your home as collateral for an open credit line. The only drawback here is that you risk losing your home if you don’t pay up. Also, repayment terms can be upward of 10 years. On the flip side, interest payments on HELOCs will be affordable and possibly tax-deductible. Click here to learn more about our Home Equity Line of Credit.
3. Balance transfer >> Move your debt to a new credit card with a low interest rate. The only disadvantage with putting more plastic into your wallet is that you may rack up a new credit card bill. Also, the low interest or no interest may not last. As a member of OE Federal, you can take advantage of our Visa STEEL and STEEL Rewards credit cards for low rates, reward points, and other benefits. Click here to learn more about our Visa STEEL Credit Cards.
4. BALANCE Financial Fitness Program >> As an OE Federal member, you have access to free and confidential financial counseling and education. This includes topics such as debt consolidation, budgets, credit review, and so much more. Click here to visit BALANCE’s website or call 888.456.2227. 

While there are potential downfalls that you need to watch out for, debt consolidation can save you time and money if used wisely!