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For credit card debts, your required minimum payment declines as your running balance decreases.
Although you pay less each subsequent month, sticking to the required minimum payments costs significantly more money over time.
A debt consolidation loan is ideal if you are looking to reduce your monthly repayment amount on your debt, or if you want to have the convenience of paying only one amount every month.
If you have a good credit record and you want to reduce your monthly debt repayments, you can apply for a debt consolidation loan and benefit from the ability to repay your creditors in full and only have one lower instalment to worry about.
If you can afford a significant monthly payment (much more than your minimum payments) then recommends the Debt Avalanche method, where you maximize what you pay toward the debt with the highest interest rate to avoid paying unnecessary interest, and then roll ALL of that payment to the next highest interest rate account, and on down the line, until all of your debts are paid off.
You can also perform a similar optimized payment process using the Snowball method where you start with your smallest account first (to get a personal sense of progress, by paying accounts off and achieving your goals) and then roll ALL of that payment up to the next account, and so on.
However, this strategy uses your home equity, putting your home at greater risk of foreclosure, if you experience debt problems in the future.
Your debt payments are also stretched across the life of the mortgage, meaning your debt is not repaid until your mortgage is paid off and your overall cost may be high.
If you cannot afford your payments, you may want to explore credit counseling or debt settlement.You cannot apply for a debt consolidation loan if you are over-indebted already, blacklisted or under debt review.