Debt consolidation basics: What you need to know

Credit card debt is common in the U.S., with the average American carrying a credit card balance of more than $5,000 in 2020. With high-interest payments and large principal balances, it can be hard to pay off credit card debt, resulting in a snowball effect that makes getting out of debt seem difficult or even impossible.

One common way around this problem is called debt consolidation. This practice can be useful, simplifying the debt payment process. It may also help you secure a lower interest rate that allows you to pay more toward the principal debt, paying down the total faster. But, there are some drawbacks to debt consolidation. Before taking this step, it’s critical to know as much as possible about how it works and how it will impact your finances.

Read the full article in the Finances FYI section of The Seattle Times, sponsored by 1st Security Bank.