For many of us, debt is a part of life. There is no reason to be ashamed. – In 2021, most Americans were in some sort of debt, with the average totaling more than $90,000 (CNBC). We take out loans in order to pay for some of the most important things in life: our homes, our cars, our education, our health. But sometimes, debt can feel overwhelming. If that’s the case, it may be time to consider debt consolidation.
Debt consolidation can be helpful in many situations. But while you may have heard the term before, you may not know exactly what it is or how it works. Keep reading to find out more about what debt consolidation is, how it works, and how an Armed Forces Bank Access Loan may be right for you.
Why Consolidate Debt?
Consolidating debt can help you combine two or more of your existing debts into one, larger debt. For example, let’s say you have credit card debt and auto loan debt. Rather than having to make two separate monthly payments -- on your student loans and on your auto loan -- you’ll be making one payment that covers them both.
Besides not having to deal with juggling multiple monthly payments, there are other benefits to debt consolidation as well. In many cases, you may be able to negotiate more favorable debt repayment terms, such as a lower interest rate, a lower monthly payment, or even both.
How Debt Consolidation Works
When you consolidate debt, you’re actually taking out a brand-new loan. This new loan encompasses the other debts you’re consolidating; essentially, it transfers your debts to a new lender.
Keep in mind that debt consolidation is not the same thing as debt settlement. With debt settlement, you’re reducing the actual amount of debt you owe. Debt consolidation, on the other hand, does not reduce your owed debts, but it reduces the number of creditors you owe. However, it can make life easier on you … and still end up saving you money.
Let’s say that your auto loan had a balance of $5,000 and an interest rate of 14%. Your credit card had a balance of $10,000 and a 28% APR. With debt consolidation, you can apply for a new loan with a lower interest rate. Perhaps your new interest rate for the entire, $15,000 balance, is only 12%.
That interest rate can make a big difference when it comes to how much you’ll pay over the life of the loan. This is true even if you continue making the same monthly payment amount as you did before the consolidation. And now, you’ll only have one monthly payment to think about, instead of two.
How an Armed Forces Bank Access Loan Can Help You Consolidate Debt
At Armed Forces Bank, we are committed to serving those who serve. If you’re considering debt consolidation, our Access Loan gives our military community access to the funding you need with a fast and easy approval process.* This personal military loan has flexible credit options for Armed Forces Bank clients as well as active duty or retired military borrowers with less-than-perfect credit. Features of our loan include the following:
· Expanded credit options for existing Armed Forces Bank clients
· Credit options for borrowers with little or no credit history
· Fixed terms and monthly payments to simplify your budget
· Automated payments so you'll never miss one
In order to apply for the access loan, here’s what you need to do. First, complete your application online. You’ll see your approval status instantly. Next, you’ll receive and accept the loan offer. At that point, you have quick access to the funds in your Armed Forces Bank account.
If you are already an Armed Forces Bank client your loan will be deposited directly to your account. If you are new to Armed Forces Bank, a new Access checking account will be set up first, and then your loan proceeds will be deposited there.
*Subject to credit approval. Restrictions apply. Annual Percentage Rate is based on credit score. Only one personal loan allowed to any borrower at any time. Loan terms are based on the loan amount. Origination fee applies. Demand deposit relationship required. Refinance applicants must qualify for a minimum of $250 in additional cash for approval.
If you are looking to improve your credit, or build your credit score back up, check out our Secured Credit Builder Credit Card.
Why Armed Forces Bank?
Armed Forces Bank is a family-owned military bank. Our mission is to provide a superior banking experience with fast, easy and personal service. We’ve been serving military families for over 100 years, so we understand the unique banking needs and challenges for our valued servicemembers.
An Armed Forces Bank military loan gives you access to the cash you need without breaking your budget. Our unsecured military loans offer flexible terms and no early repayment fees. On top of being used for debt consolidation, loan proceeds can be also used to help with household expenses, cover education costs, fund travel or vacations, and more.
Get Started with Consolidating Your Debt Today
Debt consolidation can help relieve the burden of debt. At Armed Forces Bank, we’re committed to being your partner in financial health. And that’s why we are proud to offer our Access Loan to those who have served our country.
If you’re looking for a lender to help with your debt consolidation journey, look no further than Armed Forces Bank. Apply today.