Debt consolidation involves rolling multiple debts into a single monthly payment (ideally with an interest rate that saves you money over the life of the loan). This can simplify your debt repayment process and potentially lower the amount of debt you owe in the long term.
Let’s look at how debt consolidation works and when it may make sense for you.
What is debt consolidation?
A debt consolidation loan is a personal loan that you use to pay off other debts. Debt consolidation loans are most often used to consolidate credit card debt but can be used for other types of debt like medical bills.
Debt consolidation loans can allow you to roll – or consolidate – multiple debts into one, giving you one (usually fixed) monthly payment to keep track of and a single interest rate. You may also be able to save on interest, depending on the interest rate you qualify for and the loan term.
When is debt consolidation a good idea?
Debt consolidation can be a good idea if you have high-interest debts and can qualify for a lower interest rate that ultimately saves you money over the loan term. Note that even if the interest rate is lower, depending on the repayment period, you may end up paying more in interest overall. Debt consolidation can also make sense if you are having trouble keeping track of multiple debts and want the convenience of one payment.
You must first qualify for a loan and a better interest rate. Lenders will look at your creditworthiness, income and debt-to-income ratio when deciding whether to approve you for a loan. You may be in a good position for debt consolidation if all these factors are in good standing.
Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
