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Debt management: Consolidate and reduce debt faster

Let's face it — credit cards are very convenient. You can make purchases anytime, anywhere as long as you have credit available. But when you look at how credit cards work, you'll find there can be a high cost for convenience.

Not only do credit cards have high interest rates, they're also revolving credit – a form of debt that renews right after you make a payment. While credit cards can help establish, strengthen and even rebuild credit, they can also be harmful if you're only making minimum payments and not paying off your balance in full.

When you pay just the minimum you can get stuck in what feels like an endless cycle of debt. If you're looking to cut down on the number of bills you have, consolidating your debts into a single loan may be the right decision for you. A consolidation loan is a great way to start a debt management plan for now and years to come.

Couple looking over their financesDebt management: What is debt consolidation?

Ready to get started on a debt management plan? One way to take control of your debts is to use a debt consolidation loan, or an installment loan. Unlike revolving credit, an installment loan is repaid over time with a set number of scheduled payments. When consolidating debt you'll use the loan to pay off your existing debts including credit cards, auto loans, lines of credit or other installment loans. That way you're making a single payment to one lender rather than juggling multiple payments with a number of lenders.

Tip: If debt consolidation suits your needs, it can help save hundreds of dollars a month, shave years off the time it would take to repay your debts and may even improve your credit score.

If you're feeling overwhelmed, a loan can help you take control."

Is debt consolidation right for you?

Here are a couple of questions to consider before getting started with a debt management plan:

  • How manageable are your payments?
    Grab your latest statements and look at your higher-interest or hard-to-pay-off debts. You can use a credit card payment calculator to add up your debts, calculate your monthly payments and find out how long it will take to pay off your balances. If you're feeling overwhelmed, a loan can help you take control.
  • What should you look for in a debt consolidation loan?
    Make sure to get a fixed rate loan so you know exactly how much you pay each month. Find out if the loan comes with any fees or penalties; will you be charged if you make a late payment or if you pay off the loan early? Also make sure to choose a term that works with your budget.

What types of loans are available?

Fortunately you have some options to choose from when consolidating debt. At Fairstone all of our loan products can be used for debt consolidation, which means you can access various interest rates and loan amounts. Check out our unsecured personal loans, personal loan for homeowners or a first or second mortgage to see what option suits your needs and budget.

Have any questions about using debt consolidation for debt management?

If you have any questions about applying for a debt consolidation loan, contact your local branch and meet one-on-one with a Fairstone Lending Specialist. They'll work with you to create a personalized loan solution. For additional information, the Government of Canada offers some great tips on what to do when consolidating debt.

This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.