Consolidating debt options

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Nerd Wallet recommends visiting your local credit union first.

Most credit unions offer their members flexible loan terms and lower interest rates than online lenders, especially if you have a low credit score.

And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free. Ideally, that new debt has a lower interest rate than your existing debt, making payments more manageable or the payoff period shorter.

We believe everyone should be able to make financial decisions with confidence. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. " Debt consolidation is a strategy to roll multiple old debts into a single new one.

That’s why dishonest companies that promote too-good-to-be-true debt relief programs continue to rank as the top consumer complaint received by the Federal Trade Commission.

Here’s why you should skip debt consolidation and opt instead to follow a plan that helps you actually win with money: The debt consolidation loan interest rate is usually set at the discretion of the lender or creditor and depends on your past payment behavior and credit score.

Some also send money directly to your creditors, increasing the odds of successful debt consolidation.

» MORE: Nerd Wallet’s best balance transfer credit cards Pros: Back to top You can use an unsecured personal loan from your local bank or credit union or an online lender to consolidate credit card or other types of debt.

The loan may give you a lower interest rate on your debt or help you pay it off faster.

The maximum annual percentage rate at a federal credit union is 18%.

Online lenders typically let you apply for a debt consolidation loan without affecting your credit score.

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