Debt consolidation: A way out of debt

Consumer debt is rising, and most Americans are struggling just trying to make ends meet and pay off their high-interest obligations each month. The problem lies not in their level of income, most consumers facing this situation make enough money to live decently, but in how much of that income goes toward unnecessary interest payments each month.

Think about it this way. A credit card with a $2,000 balance and a 29 percent APR, costs the consumer nearly $50 in interest payments each month. And that’s only for one card. If you owe more than $2,000 on one or more credit cards, you could be paying hundreds of dollars each month in interest alone.

Likely, you already realize this, and that is why you are looking for a way out of debt. The simplest way to stop this cycle of high-interest payments is to pay off the debt, but that is not an option for most people. C’mon, let’s face it. If the money was there to pay it, there wouldn’t be any debt.

And paying your monthly minimum payment isn’t going to get you anywhere either. The truth is that most credit card companies only include 1 percent of your principle balance on your minimum payment. That means that most of your payment goes toward interest, and that interest is tacked on yet again the following month.

So, how do you break the cycle of high-interest debt? Debt consolidation is perhaps the only way out for some people facing rising interest costs and unshrinkable debt. By consolidating your debts you combine all of your high-interest debts into one loan with a much lower interest rate. A lower interest rate means that more of your money goes toward your principle balance and you get out of debt quicker.

Consolidating your debts also lowers your monthly principle payments. Lower interest and principle payments means that you keep more of your hard-earned money right where it needs to be: in your pocket.

So, what are you waiting for? The only thing you have to lose is your high-interest rate.