Online Debt Consolidation

What Is Debt Consolidation?

Debt consolidation is taking out a single loan to pay off the combined debt of multiple unsecured loans, meaning things like credit cards and personal loans.

A debt consolidation loan doesn’t reduce your debt, it just makes it easier to manage. You are now making one payment to one source once a month.

The other advantage to debt consolidation is that you should be paying a reduced interest rate – considerably reduced in some cases – on the unsecured debt. Credit cards, for example, have an average interest rate of 16% in 2021 and many customers pay 20%-25% or higher because of late payment penalties.

Another advantage is that your interest rate is fixed, while credit card interest rates can change if you miss a payment or are consistently late. Consolidating your debts should help you become debt-free faster.

What are you waiting for?

Benefits of Online Debt Consolidation

Technology has made the financial world an easier industry to navigate efficiently and the debt consolidation loan process is a perfect example.

There is no need to drive around town comparison shopping banks and credit unions only to find out you don’t have the right paperwork and have to go home again, or worse, you don’t meet their qualifications and your time is wasted!.

If you have the proper documentation handy, you can get through the entire application and approval process in minutes, without ever leaving the house. All you need is a computer and some workspace.

The rates, terms and conditions are provided on the website so comparing lenders is just a matter of a few keystrokes instead of jumping in the car and driving from one lending institution to another.

The online applications will ask for the same information you would need at a bank or credit union – proof of identity, income, bank account information, listing of assets and liabilities, etc. – all of which you can submit with a few keystrokes.

You fill out the application at your own pace and submit when ready. If you are approved, many lenders will pay off your creditors directly, or you can receive a lump-sum check and pay them off yourself.

Online vs. Traditional Debt Consolidation

You’re eager to get your debts, interest rates and payments under control (accompanied by curbing the unsustainable spending habits that got you there). Great!

Now, you could try calling around — debt-counseling agencies, banks, credit unions, even those debt settlement companies you hear on radio commercials — and wind up spending hours on the phone being shuttled from one specialist (or, in some egregious cases, from one huckster) to the next.

The upside: You will talk to lots of other humans and you’ll get plenty of ideas about how you might consolidate or otherwise manage your unsecured debt.

The downside: Turning all that information into an actionable spreadsheet with a clear and decisive plan may not produce easily managed results. And you’ll be out all those hours of telephoning.

There is an alternative. Some might even call it a better way.

This is, after all, the 21st Century — the Digital Age. Opting for an online solution lets data-driven experts (preferably representing a nonprofit debt-counseling agency) crunch your numbers in apples-to-apples comparisons. You converse in live texting conversations with debt counselors, put your numbers into a debt consolidation calculator designed to distill data to the consumer’s advantage, and — voila! — a plan is recommended.

Maybe it’s a consolidation loan. Maybe it’s another program entirely. Maybe it’s a hybrid involving several approaches. Whatever the solution, it’ll be laid out with precision that can be saved and reviewed against other recommendations.

Online Debt Consolidation Process

In post-Great-Recession America, revolving, unsecured debt — that is, debt not backed up by something tangible, such as a house or a car — is substantial and growing. The average household has $5,700 in credit card debt; including households where balances are paid off monthly, the figure is even more daunting: $9,333.

And until it paused in the winter of 2019, the Federal Reserve’s incremental boosting of interest rates didn’t help those carrying a balance get out from under their debt load. Average interest rates on credit card balances have surged nearly two points since February 2018, to a record 17.55%. Yours may be substantially higher.

Small wonder plenty of consumers consider debt consolidation — particularly online debt consolidation — a solution to an increasingly pressing problem. There’s a lot to love, after all: a single monthly payment that most likely will be lower than the sum of your current minimums, and a lower overall interest rate, giving you a chance — assuming newfound budgetary discipline — to pay off your debt sooner.

The online process begins with searching and shopping. Punch in “debt consolidation” to your favorite search engine and go.

You’ll find plenty of opportunities to apply, all asking essentially the same questions:

• How much debt do you want to consolidate?
• Who is applying?
• What is your annual income?
• What is your credit score?

The higher your provable income and the better your credit score, the more likely you are to qualify for the full amount you’re seeking at an advantageous interest rate. Some new-wave debt-consolidation lenders — particularly peer-to-peer lenders — take into account the length of your credit history, the type of job you have, and your educational background.

Do yourself a favor. Shop around.

Choosing an Online Debt Consolidation Company

Whatever your choice, be wary as you enter the process. Many online debt consolidators are far more interested in profiting from your financial troubles, and not so much in helping you resolve them. Avoid companies that want money up front, or those that boast they can settle your debts for pennies on the dollar.

How to pick an online debt consolidation company:

• Decide what type of debt consolidation program would work best for you. The choice is between debt management, debt consolidation loans, and debt settlement. A free credit counseling session may help you arrive at the answer.
• Research popular debt consolidation companies that provide the service you need.
• Read reviews and check each company’s BBB profile. Find out if they have a pattern of similar complaints.

Best Online Debt Management Companies