According to data from the Federal Reserve, about 40% of American gross income goes back into servicing debt, with that debt ceiling already hitting $12.6 Trillion. Housing loans have reduced by almost one trillion dollars since the bubble burst in 2008, but student debt and auto loans have quickly climbed the debt ladder by $671B and $367B respectively.
Loans for debt are quickly becoming the norm, even in other countries. It is not just an American phenomenon. Some countries are servicing huge unsustainable loans to pay back previous maturing debt. Loans and debt are an important part of the equation because it effectively means that the vast majority of incomes goes to sustain government programs and leave wealth behind in the hands of a few.
Credit Cards point to a consumer-driven economy. The figure of almost $1 Trillion that new consumer credit has ballooned to is scary. According to a NerdWallet commissioned survey of 2,000 Americans conducted by an online Harris Poll, the following might be the main reasons why consumer credit is eating into Americans’ net incomes:
- Consumer debt and medical costs are rising fast, outpacing incomes, for example, the cost of food outstrips that of income by almost 100%.
- Medical costs are rising and more Americans are putting those debts on credit cards.
- Interest on credit cards has crept into repayments, with some credit card companies having some of the highest interests over long-term periods.
Even while incomes might be objectively growing, the fact that a good portion of household expenses are chopping at the income tree should be taken as a big reason why economies may stagnate. For example, one should ask themselves why the 2008 housing bubble happened. In believing that immediate ownership of a house is a priority but not making enough disposable income to facilitate the long-term principal and interest of the repayment means that Americans cast themselves in a debt net that they can’t take care of in the unforeseen future.
Consolidating credit card loans and compounding loans, in general, makes everything slightly easier and achieves a few important things.
- Reduces the burden and bottlenecks of dealing with multiple credit service providers as with the different credit card lenders that one person may have.
- It spreads out the short-term and more expensive credit card payments over loner, more sustainable periods, and makes the repayment process simpler.
- It may ultimately reduce the combined interest that one needs to pay in order to completely clear their loan payments.
Why Personal Loans for Debt Consolidation?
Personal loans are uncollateralized loans which are extended for such purposes as education, medical, household and commercial purchases and purchase of utilities. These loans will cater for some more frequent items on our wish lists and those needs we immediately need to take care of.
The disadvantage of these types of loans unlike Federal student loans, which are carried from one provider, is that they derive from wide and varied sources. This can be maddening especially where you check your total deductions and note that you have to borrow to survive and pay past debt.
When you consolidate personal loans, you give yourself negotiated peace of mind knowing that you can quickly access your debt portfolio on a single platform. It may also save you long-term credit and help you cut down on short-term interest payments.
A small comparison of the best loans for consolidating debt from NerdWallet reveals some top names.
While there are other names on the list, the borrower should do due diligence because some of these companies offer differing terms. Loans for consolidating debt are available with a large set of variables at times for different lenders, and there should be a lengthy thought process before settling for a refinancer.
Consolidate Your Card Debt: Best Credit Card Consolidation Loans
Consolidation loans for credit cards have now become a mainstay as the portion of disposable American incomes shrinking and consumers being roped to multiple lenders at times. To make the process simpler and to give consumers the ultimate benefit for their money, consolidation loans for credit card debt are now being offered by major lenders.
A good portion of credit card debt is unnecessary. If credit card holders cut off some of their more unnecessary expenses such as subscriptions, entertainment and car expenses, they’d find themselves with more to spend on other things such as Student Loans and mortgages.
Some of the best consolidation loans for credit cards include names like Lending Club, Prosper, Upgrade and Best Egg.
What to Think About When Chasing Credit Card Debt Consolidation Loans
Some of the best loans for credit card consolidation have extended repayment periods with a possibility of clearing the interest first (not always advised). Some of the best companies offering credit card consolidation also have the lowest APRs, and that includes any costs of administering the loans.
A frequently asked question is ‘can you consolidate car loans and credit cards?’ The matter is a grey area because while that possibility exists, it might be misadvised. While personal and credit card loans are unsecured, auto loans are secured against the very vehicles themselves. Car loans may ultimately have lower longer-term interest charges, a consolidated car and credit card loan may have negative ramifications on the ultimate monthly payments for consolidated credit.