Many Americans are deep in debt as a result of outstanding credit card bills and overdue personal loans. If you need help managing your finances, a debt consolidation plan can help you pay down your balances by combining them into a single loan with one monthly payment. The personal banking team at Hawaiian Tel Federal Credit Union, with nine branches across Oahu, will discuss the benefits and drawbacks of loan consolidation.

Benefits Of Loan Consolidation

There are some compelling benefits to consolidating your loans. A consolidation plan will make your debt much easier to manage because you’ll just have one monthly payment to make, as opposed to dealing with multiple bills from different creditors. Furthermore, amassing your debt into one payment often lowers the interest rate, thus saving you money. This lower rate will also mean more of your monthly payments will go towards paying down the principal rather than towards interest charges. 

Drawbacks Of Loan Consolidation

Of course, there are some drawbacks associated with loan consolidation. Taking this step will put more money in your pocket, but you’ll need to make sure you manage it responsibly and put extra towards paying down your debt when you can. Also, if you don't make your monthly payments on time, you may wind up with more credit problems and be charged penalties. Finally,  while loan consolidation helps you manage your debt, it will not address the problems that got you into trouble in the first place. You must adjust your spending to make sure you don’t find yourself in the same situation again in the future.

The team at Hawaiian Tel Federal Credit Union will be happy to work with you to manage your debt or with another aspect of personal banking. To speak with a representative, give them a call at (808) 832-8700, or visit their website to learn more about their credit union.