Should You Consolidate your Debt?

Sizeable high-interest debt: Numerous loans with large balances can put a strain on your finances. Even if you are committed to paying them off a little at a time, high interest rates may force you to pay more than your actual balance. Consolidating can reduce that burden and help you pay down the principal faster, potentially saving money over time. 

A good credit score: A good credit score typically falls between 670 and 739, according to MyFICO. Having a stronger credit profile can increase your chances of qualifying for a lower interest rate or better loan terms. Members can view their credit score by logging in to online banking, selecting “My Profile” at the top right and clicking on “My FICO Score.” 

A well-thought-out payoff strategy: A Visa® Balance Transfer (VBT) may be a good option because it usually offers a low introductory annual percentage rate (APR) for a set period of time. After that, rates can significantly increase, so try to pay off your balance before the end of your promotional period. Avoid these mistakes when paying off your debt, and consider meeting with your Members 1st MyConcierge™ for help creating a repayment plan. 

Too many monthly payments to manage: Juggling multiple bills can add stress and increase the risk of missed payments. Consolidating debt into a single monthly payment can simplify your finances and make it easier to stay on track. 

Small and manageable debt: This is low-interest debt that you can pay off within a year. Use our debt consolidation calculator to figure out if it’s worth it to consolidate and what your monthly payment would be. If your balances are already manageable, consolidation likely won’t provide enough benefit to justify the cost.  

A low credit score: As mentioned, a poor credit score may mean you only qualify for high-rate loans that won’t save much. If you are unhappy with your current score, try these ways to improve it. 

Tendencies to overspend: The goal of transferring your debt is to pay it down, not increase it. If you often spend on impulse, focus first on small, practical saving strategies to regain control. Remember: without changing your spending patterns, even consolidated debt can grow. 

Compare total costs, not just monthly payments: A lower monthly payment may seem appealing, but total cost over the life of the loan (interest + fees) could be higher than your current debt.  

Choose the right consolidation option: Options include VBTs, home equity products or personal loans. Each has different risk profiles, fees and qualification requirements.  

Plan your repayment strategy: Make realistic monthly payments and avoid adding new debt. 

Credit impact: Applying for a new loan or credit card may trigger a hard inquiry, which can temporarily affect your credit score. However, consolidating multiple balances can improve your credit utilization and benefit your credit health over time. Before applying, review your credit report and make sure you’re choosing the option that best supports your long-term financial goals.