7. Investigate a Debt Consolidation Loan
A debt consolidation loan is a loan made for the purpose of consolidating debt balances. Many banks and credit unions offer debt consolidation loans, as do debt consolidation lenders. Because the loan is used to combine high interest credit card balances, loans and other debt, there is no security such as a home or auto to ensure the money is repaid. This costs extra, due to the risk incurred by the lender. Debt consolidation loans are categorized under unsecured personal loans, with typical interest rates ranging from 8% to 23%. This, like all other loans depends on the borrower’s credit score. A debt consolidation loan makes sense if the borrower can combine debt into one monthly payment that either saves money, lowers the interest rate overall or spreads payments over a longer period of time making debt more manageable.