Bill Consolidation Options and Advice

The idea behind consolidating your bills is to reduce high interest rates and pay off delinquent payments with a loan or low interest credit card. By paying off your debt with a loan or using a low interest rate credit card to pay everything off, you can eliminate high fluctuating interest rates and get creditors off your back.

However, when you consolidate all your bills, you’re not reducing your debt. You’re simply rolling over your debt into a loan or credit card that has a lower interest rate. It will ultimately save you money in the long run but in the beginning, you’re still stuck with the same amount. And because you’re not reducing your debt through bill consolidation, you need to consider a few things.

Bill Consolidation Considerations

For Credit Cards
If you use a credit card to consolidate all your bills, you need to start paying off the balance immediately, especially if you Top of Form

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chose a credit card with a low introductory rate. The introductory period on low interest credit cards doesn’t last forever and often the interest rate skyrockets when it does. So the goal is to pay off your debt before the intro period ends. If you don’t and you only pay the minimum balance, your debt will continue to grow and you’ll never pay down your debt.

For Debt Consolidation Loans
If you apply for and get a debt consolidation loan, you need to establish a plan of how you’re going to start paying down your debt. The loan will help you get out of an adjustable rate loan and have a fixed interest rate, but it won’t pay your debt for you. You need to pay your loan payments in full and on time. It’s the only way you’ll be able to pay down your debt and keep your finances out of trouble.

For Home Refinance Loan
If you own a home, one way to consolidate all bills is to refinance your home.

By refinancing, you can borrow more to cover any additional outstanding debt you have. However, this can be problematic because you’re basically leveraging your home to consolidate your debt. If you default on the new refinance payments because you just can’t afford it, then you could lose your home. The same goes for getting a home equity line of credit (HELOC). So if you if get a refinance loan to consolidate your bills, be sure to keep up on all payments.

So as you can see, consolidating bills is a great way to reduce interest rates, organize payments, and get creditors off your back. However, you do need to be tactful when you consolidate your bills.