Debt consolidation can be a lifeline for consumers who are struggling to keep up with multiple credit card bills and…
Debt consolidation can be a lifeline for consumers who are struggling to keep up with multiple credit card bills and loan payments. One method for consolidating debt is with a personal loan, through which you repay one or more types of debt in a single monthly payment at a fixed interest rate.
Debt consolidation loans can potentially help borrowers save money while getting out of debt faster, but do they always work as intended? To answer this question, U.S. News in January surveyed 1,202 consumers who have ever borrowed a debt consolidation loan. We asked respondents a series of questions to find out how consolidating debt into a personal loan impacted their finances. Here’s what we found:
— The majority of borrowers (69%) say their finances have improved since consolidating their debt. Among them, 50% say they’re less worried about being able to afford their debt payments, 44% say they’re able to put more money toward paying off other debts and 37% say they’re able to allocate more income toward savings. Likewise, 69% of respondents would recommend a debt consolidation loan to a friend or relative.
— Over a third (36%) of borrowers saw their credit scores rise after opening a debt consolidation loan, while 26% say their scores fell….
