…but times and interest rates have changed. Does it still make sense? Will it save you money — or cost you more?
There are lots of myths floating around about consolidation these days, and it’s hard to get the straight story (especially when your mailbox is full of marketing that practically begs you to consolidate). Before you sign over your loans, make sure you have the facts.
I looked into consolidating credit card debt a while back. It didn't seem worth it. Instead, I started paying down my debts one by one, but most importantly, I stopped spending! I picked the cards with the highest interest rates and lowest balances and just paid them off. Then I moved onto the bigger balances. It felt so good to see that $0 balance on the account and it's motivating to keep at it. It's like a game. I also transferred my balances to cards offering a 0% rate until paid in full! Can't go wrong with that, unless of course you are late just once. I was late once and my rate skyrocketed right back up to 20 percent. Instead of accepting it, I called the card company and explained why I was late and they gladly re-instated the 0% offer. Also, make sure your balances are 50% or less of your available credit. Otherwise, it adversely affects your credit score.
I chose to consolidate my previous loans because it made it easier for me to make one payment to one lender as well as help me get a low, fixed rate on some of my higher variable rate loans. But now I'm on the hunt for a new lender to consolidate my remaining loans with because I'm realizing more and more the importance of having good repayment benefits. It makes sense that if another lender can give me a whole lot more cash back or credit for terms that actually make sense, why shouldn't I change?
With this said, consolidation makes sense for me. But that doesn't mean it works for everyone. Each person's situation is different, and mine just happens to be the right situation. So my advice is, before you jump into consolidation, do some research. Find out what lenders are out there, if you really save with them and how much, and then make the decision.
Come July 1, will interest rates go down? And if so, can I consolidate my fixed loans to the lower interest rate? Or can I consolidate my fixed loans with my already low interest rate consolidated loans? Is it worth it?
I have $250k in student loan debt, which after 30 years, equals more than half a million to payoff. Anybody got a knife?
What the hell is a blog anyway?