Credit cards nowadays are used way too conveniently and broadly, making it easy for bills to pile up with a greater outstanding amount to be paid. In such scenarios, you often opt for instalments/loans from your bank. Unfortunately, that’s a serious error in judgement because credit cards usually charge up to 35% to 40% APR for any late payment. Consequently, over a period of time, you pay a significantly greater amount.In contrast, a debt consolidation loan is a cost-effective way to pay off your credit cards. A debt consolidation loan usually charges a 3% to 7% interest rate depending on the credit score and predetermined evaluation criteria for the loan consideration. Take the following as an example:Let's say, you have HKD100,000 outstanding on one credit card plus HKD200,000 on another. You have a total of HKD300,000 to pay combined. One bank has a 35% interest rate and the second charges 30%. On top of the HKD300,000, you have to pay HKD195,000 in terms of interest. Needless to say, you have bigger monthly instalments and twice the headache to deal with.In such circumstances, a debt consolidation loan helps you with lower interest rates and monthly payments. Suppose you opt for a debt consolidation loan and the bank or money lender offers you HKD300,000 on 3% APR to be paid off in a year. This way, you pay HKD309,000 in 12 months - just HKD9,000 above your actual debt with 12 fixed instalments of HKD25,700 each.When looking at it from this perspective, it is obvious to see why a debt consolidation loan might be your best option. However, before agreeing to one, be sure to compare it with other offers from various companies so that you apply for one that gives you the greatest value.Should you have any enquiries relating to debt consolidation loans or finding the right companies that give you the best options, come talk to us at Lendela. We will be more than happy to lend you a helping hand.