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Considering a debt consolidation loan to pay off your credit cards or other debt? A debt consolidation loan
can provide a practical plan to gain control of your finances and reduce your payments by hundreds of
dollars each month, plus convert the interest into a new tax deduction.
How Does a Debt Consolidation Loan Save Money?
Compared to revolving credit accounts, a debt consolidation loan can replace high variable rates with a
low fixed rate installment loan, which provides a fully amortized lower payment schedule to retire your
debt, instead of prolonging the balances with the usual minimum payments.
Simple interest is another reason a debt consolidation loan can save money. Credit card debt is typically
charged daily compound interest, which means that you would pay interest on the outstanding principle
balance and the daily accumulating interest.
Since your mortgage usually is the only type of tax deductible interest, a debt consolidation loan is also a
good way to convert interest paid on debts into a new tax deduction. Your annual savings can be
substantial when compared to the alternative. A debt consolidation loan is a simple interest, fixed rate,
second mortgage that can be used to pay off any type of debt, and also provides the option of receiving
cash out for any purpose. The loan does not change the terms of your existing first mortgage, and no
equity is required.
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