Struggling to handle large amounts of credit card debt with high interest rates is a sad reality for many consumers throughout the country. There are a variety of ways to tackle debt problems, but finding the right solution for you can be confusing and tricky. For consumers with a significantly heavy debt load, consolidating credit card debt is truly a win-win solution for all parties involved. This is because of the role that interest rates play in determining risk for lenders.
The Problem Facing Lenders
The way credit lenders make a profit is by lending you money and charging interest until you pay the money back. While it may seem that rising interest rates are any easy way for lenders to make more money, the truth is that they are doing so as a means to cover the financial risk of lending that money. When someone defaults on their debt, they effectively take money from the lender, forcing the lender to raise interest rates on the rest of us.
But lenders know that high interest rates are a turn-off to customers. If they could find a way to lower interest rates while still maintaining profit margins, they would do so in a heartbeat.
The Role of Debt Consolidation Companies
This is where debt consolidation from Creditguard comes in. Consolidators provide a level of risk management for lenders by vetting individuals like you looking to lower their interest rates and pay off their debts more quickly. This, combined with the fact that debt consolidation companies do lots of business with credit card companies, allows them to be eligible for lower interest rates that most people can’t get on their own.
The consolidation company is staking its reputation on its customers’ ability to continue paying their debts, allowing them to get significantly lower rates from lenders. In effect, you are put into a separate, lower-risk bracket for your lender that also means lower interest rates.
What Lower Interest Rates Mean For You
Lower interest rates mean that more of your money goes toward paying off your loan each month. This means that your loans and balances get paid off more quickly, allowing you to save potentially thousands in interest payments over the course of your loan. While exact specifics vary from person to person, many have reported paying off their credit card debt decades faster than if they had continued making minimum payments. The same could be the case for you, so get on the track to debt relief today by looking into debt consolidation today.