What is Debt Consolidation?
Debt consolidation is a way to combine multiple debts, loans, or bills into just one single payment, often with a lower payment, lower interest rate, or longer payoff terms. This technique can be used to combine unsecured debts like credit card bills, medical bills, or personal loans.
How Does Debt Consolidation Work?
There are a few options for consolidating your unsecured debt, with varying levels of risk. Some people choose to get a 0% interest credit card to transfer their debts onto, paying off the full balance during the promotional period before interest starts to accrue. However, this can be a risky tactic if you are unable to pay off the balance before the end of the interest-free period, at which point you may be in worse shape than before.
At People’s, we recommend a fixed-rate debt consolidation loan. We’ll work with you to reduce your total payments by combining your obligations all into one loan. The result: You’ll pay less interest and lower monthly payments. These unsecured loans are for a fixed term and a fixed rate, so your payment never changes and you aren’t at risk of outrageous interest rates.