Debt Consolidation Loans
If you're looking to reduce your monthly outgoings then debt consolidation loans could represent a good approach. We've included them within this section because many people use them to reduce payments associated with credit card debt.
So firstly, what is a debt consolidation loan and what's the concept behind it?
Well, when you borrow money you obviously (generally) get charged a rate of interest. Those interest rates can vary. On some products, they can be surprisingly high. This is where credit cards are usually mentioned in the mix, since they are frequently associated with higher interest rates.
If you've run up a considerable amount of debt on credit cards then you may find that those high rates of interest are causing quite a bit of pain. You'll notice that you're spending a significant amount of money each month simply servicing the debt.
So what can you do to reduce those high interest payments? There are a few options open to you and in the specific case of credit cards, you might want to look into balance transfers. As ever, you'll need to do your sums to see what works best for you.
Alternatively, you could effectively take out a new loan at a lower interest rate. You can then use that new loan to pay off the outstanding debts on the old loans. By doing so, you'll have reduce the interest rate that you're paying. You'll also have combined any outstanding loans into one single loan, which some people find easier to manage.
That's what a debt consolidation loan is all about.
But it's not for everyone. Some people complain that these loans actually leave them paying out more money, possibly over a longer period of time.
You need to make sure that it's the best option for your finances. Unfortunately, that may involve sitting down with a pen, paper and calculator - you'll need to work out the most efficient way of reducing your outgoings.
If you have any doubt about the best course of action then it's always wise to consult with an independent financial advisor.
Money savings tips
Saving on the big things in life
Spending less on rent
Reducing credit card debt
Debt consolidation loans