Debt Consolidation: Help for Households in Arizona

Key takeaways:

• People in Arizona have been hit especially hard by rising interest rates because they have more debt than the average American.

• Debt consolidation may be a way of making your debt more manageable and affordable.

• There are several debt consolidation options for Arizona residents. These include local banks, credit unions, national lenders, and credit card companies. 

Inflation and higher interest rates have made it tougher for households across the nation to make ends meet. It’s been especially hard on people in Arizona because they have more debt than the national average. 

According to the Federal Reserve Bank of New York, the average debt in Arizona is 15% higher than the national average. 

Nowadays, inflation is prompting more borrowing. Higher interest rates are making borrowing more expensive. These conditions make the higher debt burdens people in Arizona carry hard to handle. 

Debt consolidation is a way of fighting back against those trends. Debt consolidation can make your borrowing costs more manageable, so you have more money left over for the things you need. 

What is debt consolidation?

Debt consolidation is combining multiple debts into a single new debt. 

You can consolidate debt by using a new loan or other type of credit to pay off some or all of your existing accounts. Some of the ways you can borrow to pay off existing debts include:

• Secured personal loans

• Unsecured personal loans

• Home equity loans

• Balance-transfer credit cards

How debt consolidation can help

Debt consolidation does more than simply move debt from one place to another. Done correctly, it can make your debt more manageable.

Debt consolidation can accomplish some or all of the following goals:

• It can simplify your monthly payments by merging multiple debts into one.

• It can lower your borrowing costs by exchanging high-interest debt for lower-interest debt.

• It can reduce your monthly payments by giving you more time to repay what you owe.

There may be trade-offs involved. For example, stretching repayment over a longer period can mean paying more interest over the long run. However, if that’s what it takes to be able to keep up with your payments, it may be worth it.

When considering debt consolidation, start by thinking about what kind of help you need most. Then look at other borrowing options. Compare both the monthly payments and the total interest cost over the time it will take to pay off your debt. 

Simply combining your debts into one might be enough to help you stay on top of your payments. Better yet, reducing your monthly payments by lowering your interest rate and/or giving yourself more time to repay may be a game-changer.

Debt consolidation loans in Arizona

People seeking debt consolidation in Arizona have plenty of options. For starters, there are 16 FDIC-insured banks headquartered in Arizona and dozens more doing business in the state. There are even more credit unions in Arizona.

Beyond local institutions, there are many national banks, credit card companies, and non-bank lenders you can access online. 

All these choices can empower you as a consumer. Once you decide on the type of debt consolidation loan that’s best for you, compare lenders to see who offers the most competitive terms for your situation.

Alternatives to debt consolidation

If you’re struggling with debt, there are other potential solutions besides debt consolidation. 

Credit counseling

Credit counseling is a one-on-one process of having a trained expert help you develop a plan to address your money problems. This may include advising you about your options, helping you develop a budget, or formulating a debt repayment plan for you.

Credit counselors are generally not-for-profit organizations, but they may charge a fee for their services. You should research any credit counselor to make sure they have a clean track record. You can research credit counselors in Arizona through your nearest state Consumer Protection Office.  

Debt relief

Debt relief is when a lender changes repayment terms to make them more affordable to a borrower. It can include lowering your interest rate, giving you more time to repay, or reducing the amount you owe. Having some or all of the amount you owe forgiven may have an impact on your credit. In the long run though, it may be the best path to rebuilding your credit.

You can negotiate debt relief yourself, or hire a debt relief specialist such as Freedom Debt Relief to do it for you. 

Bankruptcy

Bankruptcy is a legal process of having a court figure out how to settle your debts. It often means giving up control of how your assets or income are used to pay the people you owe. It will appear on your credit reports for many years to come. 

Depending on your situation, bankruptcy may be your best option for getting creditors off your back. Still, you should only resort to this option once you have considered the alternatives. 

Getting help with your debt in Arizona

If you’re feeling stressed by debt payments, help may be nearby. You just have to reach out for it.

Debt consolidation is a way to both simplify your monthly payments and make those payments more affordable. There are several debt consolidation options for Arizona residents. 

Besides dozens of banks and credit unions based in the state, there are also several national lenders and credit card issuers whose products are available online. These give you many possibilities for finding the right debt consolidation option for your needs.

If you can’t find a debt consolidation approach that works for you, there are other possibilities. These include credit counseling, debt relief, and bankruptcy.

If you’re not sure how to get started, you can talk to a debt consultant at Freedom Debt Relief. That consultant can review your situation and suggest solutions.

Whichever approach you choose, remember that getting started is the first step towards feeling better about your finances. 

Frequently asked questions

What does debt consolidation do?

Debt consolidation combines some or all of your debt into a new loan or credit card balance. Doing this simplifies your monthly payments, and in many cases can make those payments more affordable. 

Is debt consolidation bad for your credit?

With the right approach, debt consolidation should help your credit in the long run. While opening a new credit account might have a small, short-term negative impact, over time a successful debt consolidation program should help your credit score. It can do this by helping you keep up with your payments, and possibly by paying down your debt more quickly. 

Am I a good candidate for debt consolidation?

Anyone with multiple debts could potentially benefit from debt consolidation. In particular, if you have a lot of high-interest debt like credit card balances, you are likely to be a good candidate for debt consolidation.