Benefits consolidating credit card debts

09 Feb

And just like a regular bank, your interest rate is determined on your perceived risk to repay the loan, so the lower your credit score, the higher your rate will be.The key difference here is that many investors prefer to finance higher risk loans because they’ll make more money off successful transactions.Here’s where the peer-to-peer process differs from a regular loan.Individual investors (peers) finance your loan and profit from the interest you’re charged — just like a regular bank would.That number greatly affects the true cost of using this option.Again, it might still save you money to consolidate this way, but you do have to look at your own finances to know for sure.

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You can apply for debt consolidation loans through financial institutions such as a bank, credit union, or online lender.

Otherwise, you might end up paying even more money in interest than if you had simply paid each balance separately each month.

Compare your current interest rates to the ongoing interest rate you’ll receive after the introductory period is over to help you decide if this is a good move for you.

Another option to consolidate your credit card debt is to pay off your various creditors with a single debt consolidation loan.

Just like a balance transfer, the goal here is to pay off your credit cards and save money by getting a lower interest rate.