If you have a lot of bills that you pay to different companies, it sometimes makes sense to consolidate your debts. When you consolidate your debts, you make a new loan that includes all of the previous loans and credit card debts. Some people do this with a new low-interest credit card and others get a personal loan for the total amount of their debt.
Many credit card companies offer people with good credit the opportunity to open a new account for the purpose of debt consolidation. These cards give customers a low interest rate on balances that are transferred from other cards with the hope that when the old debts are paid, customers will use the available credit to make new purchases.
If you are consolidating debt with a goal to be debt free, it is important to refrain from using the new credit card or the available balance on the old credit cards to purchase anything. Most credit cards that offer low rates for balance transfers have higher rates for purchases. Be sure to read the terms on the card before you sign the application.
Another way to consolidate debt is to get a personal loan from a bank. Personal loans sometimes have high interest rates, so be sure that the personal loan has a lower rate than your current credit card or loan rates that you are attempting to consolidate with the new loan.
Consolidating debt is a great way to pay bills and reduce debt. A good credit score is essential to getting the credit you need to make major purchases. More info: debt consolidation toronto