Thursday, January 07, 2016

Money Matters | Overcoming Debt ♥

December really is such a special time of the year, and the buzz that comes with the build-up to Christmas, the day itself, and, of course, the New Year’s festivities are incredibly exciting. Yet it’s amazing how quickly it can be replaced by that stomach-churning, back-to-work feeling, and the comedown to reality isn’t usually very pleasant.

The lights come down, the weather seems to turn a different shade of grey, and there is that unmistakable feeling of empty wallet syndrome. The festive season certainly doesn’t come cheap, especially as a mum, and it’s definitely a time where many of us tend to use the credit card a bit more often than we ought to. 

It’s nothing to be ashamed of. After all, when you get the chance to make special memories with friends and family, you want to make the most of it, and the plastic can come in very handy. But it can leave you facing high-interest debt well into the thousands of pounds, which isn’t a fun way to start the year.

Yet there is actually a quick and easy trick to ease the pain; and one that barely requires you to lift a finger. I’m talking about debt consolidation loans, the merits of which are pretty clear. Think about it… the rates banks charge on credit cards are extortionate, and if you work out the overall APR when you make only minimum payments, it’s literally through the roof. So instead of being stuck paying off a high-interest debt, why not gazump the whole lot with a low-cost loan?

The benefits of peer-to-peer platforms
The best place to start is price comparison sites, which allow you to compare apples with apples, and determine the best deal for you. Interestingly enough, when I had a look, the credit providers which featured at the top of the list were peer-to-peer (P2P) lenders. These are online platforms which act as a go-between for those people who have extra funds to lend, and those who need a loan. Rather than having a profit-taking middleman like the bank, funds are matched between the two parties, thus ensuring the utmost efficiency, which maximises value for both the lender and the borrower.

For you, this means a loan with an APR as low as 5%, depending on the amount you borrow, the term of the loan, and your credit score. You are able to borrow up to £25,000, and pay it off over a term of your choosing (up to 5 years). A loan like this would be perfect for me as I'm needing a new car and will never be able to pay for one outright myself, the fact that the APR is so low (unlike other extortionate lenders) is appealing to me. The credit score analysis process also takes just a solitary working day, so you’ll know where you stand pretty quickly. 

Equally important are the convenience and flexibility elements. It’s all done online, and requires just a couple of minutes of your time to make the initial application. Also, platforms like Lending Works even allow overpayments and early settlements without charging a penny.

It’s interesting that unsecured loans are viewed with a certain stigma. On the face of it, turning to one may feel like some sort of admission of defeat, or a consequence of uncontrolled spending. In reality, it can be a clever way to manage your finances, and take a lot of stress out of paying your bills come the end of the month. Consolidating debt is a classic example of this, and can really go a long way to cheering you up this January. Perhaps, if your credit card is a bit overheated, it could be worth you looking into it?

Have you begun the new year in debt? Do you have any goals to pay off existing debts this year?

*This post contains sponsored content.

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Peace & love,
Fiona
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