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Best for large debts
Recommended for $20K or higher in debt
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- Resolve your debt in 24-48 months
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9.6
Excellent
Rating (9,204)
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Your debt could be reduced by 35% or more
Recommended for $20K or higher in debt
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Rating (5,345)
Recommended for $15K or higher in debt
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- Pay less every month and reduce stress
- 24-48 months to become debt-free
8.2
Very Good
Rating (4,845)
Recommended for $20K or higher in debt
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8.1
Great
Rating (12,021)
Recommended for $15K or higher in debt
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- Quick and easy debt relief
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7.9
Good
Rating (6,734)
Recommended for $15K or higher in debt
- No upfront fees
- Free debt savings estimate
- Pay less each month and get out of debt quicker
7.3
Fair
Rating (11,198)
Recommended for low debt
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6.9
Fair
Rating (8,567)
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Recommended for $20K or higher in debt
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9.8
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Rating (11,347)
How A Time Of Crisis Can Be An Opportunity: Look Into Debt Consolidation
The past two years have seen the global economy falling most notably due to the pandemic. The loss of jobs and business have made Americans double-think about the stability of their income sources. A common problem faced by millions is how they can manage their payment responsibilities. But within this crisis is a silver lining for borrowers. Debt consolidation loans are more attainable and favorable. Here are the reasons why.
Assistance from Credit Card Providers
During the peak of the health crisis, we've seen how businesses shut down and workers lost jobs. The biggest banks in America announced that they will help customers who are dealing with credit card difficulties. Some of the options they provided were to offer a lower interest rate or postpone payments (forbearance). One thing to remember about forbearance is that any balance you acquire will continue to accumulate interest.
Chase, Wells Fargo, US Bank, Bank of America, Ally Bank, and Capital One are some of the top names that offered assistance to their customers who were experiencing the effects of the global pandemic. Citi advised customers to review their "always on" assistance program which includes collection avoidance and increased credit lines.
Rates for Consolidation Will Drop
Debt consolidations are similar in structure to personal loans except they are used specifically to pay your debt obligations such as credit card debts. If you currently have two active loans and one credit card, you are making three separate payments every month. With a debt consolidation loan, you only need to make one monthly payment and usually with a lower interest.
During the crisis, the Federal Reserve made emergency decisions and one of them was to reduce by 1.5% the target federal funds rate. This was the first time since the 2007-2008 financial crisis that the Federal target rate reached almost zero.
The federal funds rate is a staple used by the majority of US banks for overnight lending. Banks with excess reserves sell to banks with insufficient reserves to meet the reserve requirement before the trading day closes. If the federal funds rate goes down, banks can share some of their savings with their customers by offering loans with reduced rates.
However, it is impossible to determine how low debt consolidation loan rates would fall. In 2008, the average rate for personal loans fell to 0.3% three months after the Federal Reserve's 1.5-point emergency rate cut. After seven years of almost zero fed rates, personal loan rates reached the percentage points.
By 2019, the average rate for personal loans was 10.2%. If we look at historical data, we can expect rates to go down between 8.4 or 7 percent. Borrowers who can afford to wait for lower rates could potentially save hundreds of dollars on their monthly payments with a debt consolidation loan.
Compare Options and Find a Way to Save
The economic crisis brought on by the global pandemic has made it even more difficult for many people to manage their finances. This does not mean that we'll settle for whatever is thrown at us. If you have debts that you see could pose problems, it is better to start planning your steps now.
