In a recent survey, 73% of Americans reported that finances were their primary stress source. Undoubtedly, the weight of debt plays a role in that stress because every dollar that goes towards outstanding payments isn’t going towards vital resources. You shouldn’t have to pick between paying for car repairs or debt. Here’s a crash course in debt consolidation 101 to help you understand when to consider pursuing it, how it works, and how DEXSTA can help you.

The Debt Domino

Money may not buy you happiness, but it can certainly buy you peace of mind, which is extremely valuable. Not only does debt have a way of obstructing both, but it also cascades to other financial obligations, rarely isolating to just one account or card. Suddenly, you’re stretched too thin, making “minimum amount due” payments to multiple creditors who call you at all hours of the day. Unfortunately, these overwhelming circumstances also hinder your ability to make progress in paying off loans, credit cards, and other accounts. 

The domino effect of debt is hard to overcome, not to mention confusing. But resist the urge to bury your head in the sand to avoid addressing it. There are ways to ease your burden!

Debt Consolidation 101: How It Works

If the domino effect sounds familiar, consider debt consolidation. This strategy involves taking out a loan to pay off your other loans at a lower interest rate. This option makes sense for those with good credit scores since lenders are more likely to give them an interest rate lower than their creditors. As a result, payments to creditors are streamlined, and overall debt is paid off faster.

If taking out a loan to pay off other loans sounds counterproductive, that’s because it can be if certain variables are off. Find another solution if the following describes you:

Low Credit Score: Many lenders base their loan interest rates on your credit score. If yours is low, then pursuing debt consolidation likely won’t help you. Instead, look into DEXSTA’s No Fee Balance Transfer Credit Cards. 

Insufficient Cash Flow: If you have low or inconsistent income that isn’t sufficient to cover your new monthly payment, then explore other options. Missing payments will negatively impact your credit score and put you deeper in debt. 

Chronic Spending: If the debt you’ve accrued is from overspending versus necessities like medical bills or student loans, then that habit needs to be addressed. Otherwise, debt consolidation is essentially a temporary bandage. Once the spending behaviors are under control, you can revisit consolidation solutions.

If your credit score is just shy of optimal, but you meet the other debt consolidation criteria, order your credit report from AnnualCreditReport.com. Sometimes, there are errors you can correct that will improve your score and set you up for success. 

Consolidate Debt With a Personal Loan

DEXSTA members use personal loans to cover emergency expenses, home repairs, and pay off high-interest-rate creditors. We fund loans between $500 and $50,000 and offer flexible terms, no fees, and quick access once you’re approved. Ask a representative to set up automated payments to ensure you never miss a due date.

Without multiple high-interest payments and creditors calling non-stop, you’ll have more breathing room to assess your financial future and goals!

Choose DEXSTA for Your Debt Consolidation Needs and More 

One of the many pros of local credit unions is that they have better rates, terms, and lower fees. At DEXSTA, our services are designed to benefit members. Visit any DEXSTA branch or apply for a loan on our website, where you can learn about even more of our perks!