A bill consolidation program is a financial arrangement under which a company specializing in this service combines a borrower's multiple loans into one consolidated loan. They either pay off all the creditors and the borrower pays the total amount of the loan to the company under new payment terms and one interest rate. Some companies on the other hand act as a borrower's agent. They deal with a person's different credits in paying them monthly while the borrower remits one payment amount to them at one fixed date every month.
This simplified loan repayment scheme is ideal for people who have multiple loans which in turn come with different (and often fluctuating interest rates) and numerous due dates within the month.
There are a lot of benefits a consumer can get from entering a bill consolidation program. The basic benefits are:
Lower Interest Rate . By combining multiple debts with different and fluctuating interest rates into one fixed rate loan, a borrower can save money in the long run. A person's debt situation becomes more manageable and easier to pay off.
One Due Date to Remember . With a consolidated bill, there is only one due date to take note of. Having to remember just one monthly payment helps in making consistent payments month after month.
Convenience . Companies who offer bill consolidation often have connections in the financial and lending industry. They can take off the hassle from having to negotiate with different creditors. Being under this program will also protect one from dealing with phone calls and collection letters from third party collection agencies.
Improved Credit Score . Sticking to the program diligently until the end of its term will improve one's credit score in the long run. This is possible especially if there are no missed payments and the consolidated bill is paid up on time.
In order to make a bill consolidation program work for you, you must stick with the schedule of the consolidated loan so as to avoid paying additional late fees. Also, you should still monitor your billing statements. At the end of the payment term, check with all the creditors to verify that all obligations have been cleared already.