Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
Debt Relief & Settlement Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Proven Results
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
    • Careers
Qualify For Debt Relief
Debt Relief & Settlement Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
United Settlement » Blog » Why Consolidating Debt Can Be a Good Idea During Stressful Times

Why Consolidating Debt Can Be a Good Idea During Stressful Times

August 18, 2020

There’s no mistaking the fact that 2020 has been a difficult year. The pandemic has brought with it all kinds of stress and uncertainty related to health, safety, employment, finances, plans for the future – and how to simply go about the business of living in the present.

The old adage, “one day at a time” certainly applies to these stressful times in which we’re all living. For many, dreams for the future remain on hold while the United States struggles to contend with the virus, its impact on the general mood of the country, and the overall economy.

Dramatically higher levels of unemployment have altered millions of lives, and many households are turning to credit cards to pay living expenses. While many creditors are making allowances to their borrower customers in the form of short-term forbearance, credit line extensions and fee waivers during the pandemic, creditors are not going as far as to eliminate debts.

Many debtors are struggling to keep up with multiple payments to multiple creditors each month in an effort to pay down high interest rate credit card debt and other forms of unsecured debt.

It is exactly at such a stressful time as this – when the environment is uncertain and cash flow is tighter – that debt consolidation can be a very good idea for someone who finds their back up against the wall financially. Let’s take a closer look at why consolidating debt can be a good idea during stressful times.

Debt Consolidation

The process of debt consolidation combines multiple debts into one single loan, typically resulting in a lower interest rate and lower monthly payment.

The resulting lower monthly payment frees up cash for day-to-day living expenses while alleviating stress and reducing the need to rely further upon credit cards and other forms of debt during a difficult time.

A debt consolidation loan (DCL) provides the added benefit of streamlining the repayment process while simultaneously lowering interest expense and the total amount repaid over time. Since interest rates on debt consolidation loans frequently are lower than those attached to credit cards, for individuals carrying multiple cards with multiple payment dates, utilizing a DCL to simplify the repayment process can make a lot of sense.

Keeping track of multiple cards with multiple billing cycles can get messy and lead to inadvertent late fees and missed payments, both of which cost money and can harm a credit score and profile.

In addition to the convenience of one single monthly payment, the monthly interest expense savings that results from paying off high interest rate credit card debt with money raised through a DCL frees up extra cash that can be utilized for living expenses during the stressful period that we are living through.

Balance Transfers

Another available debt relief option that consolidates existing debt involves balance transfer credit cards. A balance transfer credit card allows you to transfer high interest rate credit card debt from existing credit card accounts to another credit card account at a lower promotional interest rate for a specified period of time.

In the best case scenario, the promotional interest rate on the credit card balance transfer will be as low as 0% for twelve to twenty-four months.

These 0% balance transfer credit cards are generally reserved for individuals possessing strong FICO credit scores well into the 700s or higher. However, it is not uncommon for individuals with good to very good FICO credit scores to still qualify for low single digit interest rate balance transfer promotions.

Importantly, pay close attention to the length of the promotional period on any balance transfer credit card. You should realize that following the expiration of this promotional rate period, the interest rate on your balance transfer can climb substantially higher – often to as high as the rate for credit card purchases, which can be 15% to 25%.

You should also be clear about the balance transfer fee, as most balance transfers will involve a fee of 3%-5% of the balance transfer amount. However, even after taking into account the fee, the interest expense savings that results from transferring high interest rate credit card debt is almost always worth it, as is the satisfaction derived from knowing that each month, a greater percentage of your payment is reducing the outstanding balance, rather than being wasted on interest expense.

It also is possible that the new minimum monthly payment percentage as applied to the balance on the balance transfer card will reduce your monthly payment on the debt – temporarily improving your cash flow during a stressful time.

A reminder, however, to be careful here – paying off less during the promotional period can set you up for a day of reckoning later when the promotional interest rate period expires and you still have an outstanding balance.

Home Equity Loan or Line of Credit

Another approach to debt consolidation that can provide relief during stressful times involves a home equity loan or home equity line of credit (HELOC).

Home equity loans and HELOCs are options for individuals who have accumulated equity in their dwelling – in other words, for those who owe less on a mortgage than the actual value of the property. Because both of these are a form of secured debt, with the property serving as underlying collateral, they will almost always have lower interest rates than credit card debt.

HELOCs frequently offer more flexible interest rates and payment schedules than home equity loans, but either can meet the purpose of consolidating debt during a stressful time. Home equity loans and HELOCs can help debt burdened individuals save money on interest expense both in the short- and long-term while immediately improving cash flow and freeing up funds that can be used on day-to-day expenses during challenging and stressful times.

 

About the Author: Steven Brachman

Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.

Gabriel Gorelik, CEO & Co-Founder
Gabriel Gorelik

Gabriel Gorelik paves the way for customer service and operations at United Settlement. He is passionate about numbers and holds a strong belief in helping anyone with their debt. Before United Settlement, Gabriel received his BS in Finance & Economics from Brooklyn College. After graduation, Gabriel went on to build his first financial services company where he managed thousands of accounts for business and consumer clients. He understands the importance of client satisfaction, professionalism, and exceeding expectations.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Related

Search Blog

Are you in debt? we can help

  • Amount
  • Contact

How much do you owe?

Excellent

Based on 377 reviews.
Overall 4.4 out of 5 stars

View All Reviews

Annette Huggins

March 14

That when it seems like nobody can help United will.

This was a great experience for me. I am just starting but Madelene Gallon made me feel like we were friends for years. She tried to make me feel that she would help me and make sure I got the best deal...

Kiirstin

March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible,...

Kiirstin

March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible,...

Dylan

February 28

Quick, easy assistance!

I've been working with Ben at United Debt to help me organize and get out of debt for once - I've been dealing with debt for ages and Ben showed me some simple ways to begin dealing with things to keep...

Takota Carrie

February 14

I need help

I really appreciate

JONICA Amber PIRON

December 21

Great!

Renika went above and beyond today to help me. She is wonderful to work with! Thank you again Renika for all of your help today! Happy Holidays to you!

Jayvon

December 20

Paying back

They where great listeners

Shawn abetha

December 14

Everything

Thanks

Robert Phillips

November 23

Do your home eork

Paid several thousand dollars and nothing done. Ended up settling 90%by myself. This is a preatory company. So do your homework. This will never post.

Dm

November 18

Customer service is truly helpful

Renika was so helpful. My account was paid off but I kept receiving notifications. She cleared up the situation.

Jose Rosa

November 16

Great Customer Service

Renika did a wonderful job handling my questions and transactions. She is very patient on the phone and took care of my needs accordingly.

Russ

November 03

Very helpful

Renika did a great job in answering all of my questions in a timely manner. She was polite and friendly. Keep her on the payroll.

Anthony Desoto

October 31

What's Important to me is United Settlement Costumer service !

United Settlement Costumer service is Amazing Everyone is Professional . I am so happy choosing them with my card Debt. thank you all for helping me out .

Ri cky

August 23

That this company has integrity!

A responsive company that keeps it clients up to date and fully informed. I like the fact that I can send them a text and be guaranteed an answer within 24 hrs.

Jerry Bolandis

June 04

Professional and focused on facts and truth not hype. Excellent. We want to know facts.

Great work very professional and great updates. Communication is excellent.

janice head

October 25

trust them

Excellent. Also each time i call there they treat me with respect even though they are probably thinking jerk . You sure have made mess of your life. but they have been taught to smile smile smile. this...

Scott W O'Neill

August 01

Thanks for all your help and negotiations.

Thanks for the update! I have faith in you guys and will continue my payments. Thanks for all your help and negotiations.

Cassandra Robinson

July 30

That A Settlement Was Entered.

I Absolutely Love You All At United Settlements. You All Have Saved My Credit Solutions. I Would Refer Everyone To You Services.

Mildred Yvonne Sherron

July 16

The results of the settlement attempts.

So far, I have found United Settlement more than satisfactory. Very conscientious and very efficient in providing a service in debt settlement. Thank you and all the members of your team who are assisting...

Diana Cardona

July 16

Tough Financial Hard Times During Covid-19

I signed up with United Debt Settlement because of large credit card debts, which had taken a financial toll on my credit. UDS has an outstanding reputation assisting clients like me achieve financial recovery...

  • Contact Us
  • 240 West 37th Street
    Suite 400
    New York, NY 10018
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
  • Careers
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 25% including fees, over 24 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us. NMLS ID: 1947026
    Copyright 2023. United Debt Settlement, LLC