Staying on top of multiple repayment dates. Getting to grips with shifting interest rates. The financial pressure of paying more each month than you can comfortably afford.
Juggling expensive credit cards, store cards and loans can often feel like heavy lifting.
The good news is that by consolidating your debts, you could take the weight off your mind as well as your wallet. This is where you use a low-rate debt consolidation loan to pay off the outstanding balance on your higher-rate cards or loans – saving you money in the long run and tidying up all your payments into one fixed monthly amount.
It’s easy when you know how – here are our top tips, told with a little help from the sport of weightlifting.
1. Don’t jump forward (without doing your research)
In weightlifting, jumping forward when you raise the barbell results in at best destabilisation and a failed lift – and at worst, serious injury.
If you’re considering a debt consolidation loan, be sure to research your options and check your rate with a few loan providers before you apply. Do bear in mind that the headline rate advertised is not necessarily the rate you’ll be offered, and not all loan providers can give you a personalised rate without injuring your credit score.
Bonus tip! Want to find out in minutes how much you could save on interest by consolidating your debts with Zopa? Try our debt consolidation calculator.
2. Keep the bar (your budget) close
The closer a weightlifter holds the bar to their body, the more control they have over the barbell.
A debt consolidation loan could be a great way to take back control of your finances – especially when combined with keeping a budget to track your other outgoings, such as bills and groceries. Many banks or financial apps offer a free budgeting tool to help you get a clearer picture of what’s happening to your money.
3. Go heavy
It’s important that you can afford your monthly repayment, but do remember that the shorter the term of your loan, the sooner you’ll be debt-free. If your main reason for consolidating debt is to get debt-free, it’s worth stretching yourself to the highest monthly payment you can afford.
Bonus tip! Another thing to bear in mind (this may sound counterintuitive) is that a shorter loan with a higher APR may cost you less overall than a longer loan with a lower APR. For example, a 3-year loan at 10% APR will cost you less overall than a 5-year loan for the same amount and term at 7% APR. A loan quote will always tell you how much you’d pay in fees and interest.
4. Be aggressive
And by ”be aggressive” we mean speed, not trash-talking and tooth-baring. When weightlifters have mastered the basic technique, working to lift faster helps develop control and power.
Once you’ve consolidated your existing debts into a new loan with a lower interest rate, you may find yourself in a position to make overpayments towards your loan, depending on fluctuations in your income. Interest is charged on your outstanding balance only – so reducing that balance by making overpayments will reduce the interest you pay overall. Remember to check whether your loan provider charges early repayment fees.
5. Consistency is key
Everyone is different. Sure, there’s best practice for weightlifting, but every competitor has their own style within the acceptable limits of technique.
Whether you want to get debt-free as soon as possible by reducing the interest you’re paying on different credit cards, or simply roll your payments into one per month, the way to consolidate your debts effectively is to make a plan and stick to it.
6. Seek expert guidance (if you need it)
Great weightlifters aren’t always born. Some are made. Many of the most successful weightlifters owe their success to a great coach.
A debt consolidation loan could help you take control of your debt and get financially fit – but if you’re experiencing serious financial difficulties, you might like to get in touch with Step Change, who offer free, confidential and impartial advice around all sorts of financial topics. They can also suggest places where you can get debt advice in your local area.