The Benefits of Consolidating Debt

Debt is very prevalent in South Africa. (Statistics say that individuals spend at least 76% of their disposable income on repaying debt.) An increasing number of South Africans are relying on credit as a solution for their financial challenges. We can’t always pay for goods and services using cash.  

Sometimes expenses come up when we least expect them. Getting credit through credit cards or personal loans can be quite helpful at such times. The problem arises when you struggle to repay the debt.

When you have multiple debts and you find yourself struggling to repay them, it may be worthwhile to consider consolidating debt.

This option allows you to combine your multiple debts into a single loan. This way you get a reduced monthly payment and possibly a lower interest rate. The financial institution that you choose may be able to offer a reduced monthly instalment, with a lower interest rate. It can also give you a life line to salvage your credit record.

What are the benefits of consolidating debt?

It will assist in clearing your debt faster. By combining your multiple debts into one payment, you won’t pay multiple debts for long periods of time.

It makes it easier to manage your finances and makes for easier budgeting. You won’t have to keep track of multiple debts anymore.

You only have one monthly payment to worry about.

It can have psychological benefits. You won’t have to deal with threatening creditors any longer and this may encourage you to focus on repaying your debt.

Your credit record can improve. By consolidating debt, you won’t have any outstanding payments. As a result your credit record may improve.

Consolidating debt has benefits for your long term financial health. Your debts will be paid off and you may get a second chance.