Reduced Interest Rates – Interest charges on high interest rate credit cards make it difficult to pay down your balances. If you make your minimum monthly payments each month, most of the amount is interest payments and a very small amount of your payment actual goes to reducing your balance. A majority of debt consolidation loans are home equity lines of credit, which are secured loans that usually have a lower interest rate. If you consolidate your debt into one loan and you are paying less interest, you can continue to pay the same amount as you have been, but now more money goes towards your principal.

Tax Breaks – If you pay interest on credit cards, you are throwing money away each month and you are not able to write those credit card payments off at the end of the year. However, if you consolidate your debt into a home equity line of credit (a second mortgage), you can write off the interest paid on your second mortgage, which gives you a tax break each year.

One Payment Each Month – Most Americans have more than 10 credit cards and have to manage a payment to each credit card each month. If you consolidate your debt, you will typically end up with one or two lines of credit, which makes it a lot easier to manage your monthly payments.

Lower Monthly Payment Obligations – If you consolidate your debt, you will have fewer creditors and lower interest rates so your monthly financial obligations will be less each month. This means that if you continue to pay what you currently pay, more money will be used each month to pay down your balances.

If you’re ready to get started with consolidating your debt and are unsure how to get started, read this article for information about contacting a non-profit debt consolidation company. These companies will be able to help you get started on a customized plan that meets your needs.