Debt consolidation

Debt consolidation is a financial strategy successfully used by South Africans to streamline multiple debts into a single, more manageable loan. Instead of juggling various debts, each with its own interest rate and due date, you can obtain a debt consolidation loan to pay off these debts.

• Simplified payments: Instead of keeping track of multiple payments and due dates, consumers have just one monthly repayment.

• Potential for lower interest: Often, the interest rate on a consolidation loan is lower than the combined interest rates of multiple debts, saving money over time.

• Improved credit score: By consistently meeting monthly repayments on a consolidation loan, consumers can positively impact their credit report.

• Psychological relief: Combining debts can provide mental relief from the stress of managing multiple loans.

Yes, several alternatives can help South Africans manage their debts:

• Debt counselling: This involves working with a professional who negotiates with creditors and creates a repayment plan.

• Debt settlement: This strategy involves negotiating with creditors to accept a reduced lump sum payment to settle the debt.

• Balance transfer credit cards: Some credit cards offer a 0% interest rate on balance transfers for a specific period, allowing debtors to pay down their debt without accruing interest.

• Personal loans: Taking out a personal loan with a lower interest rate than current debts, and using this to repay the debts, can save money.