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5 surprising credit card debt consolidation benefits to know
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Credit card debt is growing fast in today’s economy. Between the average credit card interest rates sitting above 23% and interest charges compounding daily, even small purchases can balloon into large balances. Add in today’s high costs for housing, food and basic needs, and many Americans have found themselves trapped in a cycle of growing credit card debt.
Debt consolidation offers a potential solution if you’re facing high balances across multiple cards. By consolidating your debt, you roll multiple credit card payments into one loan, often with a better interest rate and predictable payments. Think of it as trading multiple high-interest debts for a more manageable loan.
We consulted three experts from financial planning organizations to learn what makes consolidating debt worth it. Here’s what they want you to know if you’re thinking about this approach.
Learn about the many debt relief strategies available to you now.
5 surprising credit card debt consolidation benefits to know
If credit card debt feels overwhelming, you’re not alone — and there’s hope. According to Tyler Crawford, president of BHG Financial, over 70% of customers keep their debt under control after consolidating.
You have several options for consolidation. Many banks, credit unions and online lenders offer personal loans for this purpose. Balance transfer credit cards are another option worth considering.
Combining multiple debts into one loan can improve your finances in unexpected ways. Here are five powerful benefits:
1. Improvement to your credit score
“If you move credit card balances into an installment loan, it can lower your credit utilization rate,” says Margaret Poe, head of consumer credit education at TransUnion. This rate heavily impacts your credit score. Lower utilization typically means a better score.
Crawford highlights another credit score benefit.
“Paying off multiple high-interest credit cards with a single loan [can help you] avoid late payments,” he says. The new loan comes with one monthly due date, making it easier to pay on time. Regular, punctual payments help build a stronger credit score.
Find out how to get rid of your credit card debt today.
2. Lower interest rates
A debt consolidation loan usually offers much lower interest rates than credit cards.
“Saving money on interest is a huge reason to do debt consolidation,” says Andi Wrenn, a member of the board of directors for the Association for Financial Counseling, Planning Education (AFCPE). With today’s steep credit card rates, switching to a lower-rate consolidation loan can save you thousands in interest charges.
The savings grow even bigger when you make extra payments. Each additional dollar paid reduces your principal balance directly. Lower principal means less money wasted on interest over time.
3. Reduced mental burden
Credit card consolidation does more than prevent missed payments. It can relieve the daily anxiety and mental burden of managing multiple debts. With a predictable payment, you’ll feel in control of your finances and less overwhelmed by the constant stress of tracking various due dates and balances.
4. Fixed repayment terms
Unlike credit cards with variable interest rates, Crawford explains that consolidation loans give you a clear timeline and fixed payment amount. This predictability makes budgeting much easier.
Credit cards can keep you in debt longer because minimum payments barely cover interest. But a consolidation loan gives you a clear finish line. You’ll know from day one when you’ll be debt-free. Each payment brings you closer to that goal, with no surprises along the way.
5. Access to additional financial resources
Many lenders offer financial counseling and budgeting tools when you consolidate. These resources can help you develop better spending habits. You’ll learn strategies to avoid future debt and create a realistic budget that works for your lifestyle. Some may even provide personalized guidance to help you tackle specific challenges, such as building emergency savings and planning major purchases.
The bottom line
Consolidation for debt relief works best when paired with better financial habits and intentional spending. Crawford warns that borrowers can return to recklessly using credit cards after consolidating, not realizing this creates an even bigger debt problem.
If you’re considering credit card debt consolidation, start by learning everything you can about potential lenders.
“Read the fine print and ask good questions — you don’t want to be worse off because you didn’t,” says Wrenn. Then, compare offers from several reputable debt relief companies. Review interest rates, fees and extra services to choose one that fits your needs and helps you stay debt-free in the long term.
NEW YORK — The Teamsters union is launching a strike against Amazon at numerous locations across the country, including in Maspeth, Queens.
The Teamsters are calling it the largest strike against Amazon in United States history, and it’s set to begin at 6 a.m. Thursday. In addition to New York City, workers will be joining picket lines in Atlanta, Southern California, San Francisco and Illinois.
In a video announcement released Wednesday night, workers voiced their frustrations.
“Us being strike ready means we’re fed up, and Amazon is clearly ignoring us and we want to be heard,” one worker says in the video.
“It’s really exciting. We’re taking steps for ourselves to win better conditions, better benefits, better wages,” another worker in the video says.
The union says it represents about 10,000 Amazon employees and that Amazon ignored a deadline to come to the table and negotiate. The $2 trillion company doesn’t pay employees enough to make ends meet, the union asserts.
At the height of the holiday season, many are wondering what this means for packages currently in transit.
Teamsters President Sean O’Brien said, “If your package is delayed during the holidays, you can blame Amazon’s insatiable greed.”
Amazon says Teamsters are misleading the public
An Amazon spokesperson says the Teamsters are misleading the public and do not represent any Amazon employees, despite any claims.
“The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union,” the spokesperson said in a statement.
An Amazon representative says the company doesn’t expect operations to be impacted.
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Wisconsin school shooter was in contact with California man plotting his own attack, court documents say
The shooter who killed a student and teacher at a religious school in Wisconsin brought two guns to the school and was in contact with a man in California whom authorities say was planning to attack a government building, according to authorities and court documents that became public Wednesday.
Police were still investigating why the 15-year-old student at Abundant Life Christian School in Madison shot and killed a fellow student and teacher on Monday before shooting herself, Madison Police Chief Shon Barnes told the Associated Press Wednesday. Two other students who were shot remained in critical condition on Wednesday.
A Southern California judge issued a restraining order Tuesday under California’s gun red flag law against a 20-year-old Carlsbad man. The order requires the man to turn his guns and ammunition into police within 48 hours unless an officer asks for them sooner because he poses an immediate danger to himself and others.
Carlsbad is located just north of San Diego.
According to the order, the man told FBI agents that he had been messaging Natalie Rupnow, the Wisconsin shooter, about attacking a government building with a gun and explosives. The order doesn’t say what building he had targeted or when he planned to launch his attack. It also doesn’t detail his interactions with Rupnow except to state that the man was plotting a mass shooting with her.
CBS’ San Diego affiliate KFMB-TV reported that law enforcement searched the man’s home Tuesday night after the order was signed by the judge.
Police, with the assistance of the FBI, were scouring online records and other resources and speaking with the shooter’s parents and classmates in an attempt to determine a motive for the shooting, Barnes told the AP.
Police don’t know if anyone was targeted in the attack or if the attack had been planned in advance, the chief said. Police said the shooting occurred in a classroom where a study hall was taking place involving students from several grades.
“I do not know if if she planned it that day or if she planned it a week prior,” Barnes said. “To me, bringing a gun to school to hurt people is planning. And so we don’t know what the premeditation is.”
On a Madison city website providing details about the shooting, police disclosed Wednesday that two guns were found at the school, but only one was used in the shooting. A law enforcement source previously told CBS News the weapon used appears to have been a 9 mm pistol.
Barnes told the AP that he did not know how the suspected shooter obtained the guns and he declined to say who purchased them, citing the ongoing investigation.
No decisions have been made about whether Rupnow’s parents might be charged in relation to the shooting, but they have been cooperating, Barnes told the AP.
Abundant Life is a nondenominational Christian school that offers prekindergarten classes through high school. About 420 students attend the institution.
The Dan County Medical Examiner’s Office identified the two people killed Wednesday as 42-year-old Erin West and 14-year-old Rubi Vergara.
An online obituary on a local funeral site stated Vergara was a freshman who leaves behind her parents, one brother, and a large extended family. It described her as “an avid reader” who “loved art, singing and playing keyboard in the family worship band.”
West’s exact position with the school was unclear.