6 Essential Tips for Managing Multiple Loans Effectively

The dream of a debt-free life can seem unachievable, particularly when you have multiple credit cards or loans hanging over your head. If keeping track of payment due dates and installments for each source of debt leaves you overwhelmed, you need to learn how to manage multiple loan accounts the right way. 

Here are 6 of the most effective tips and debt consolidation strategies to help you manage multiple loans and credit cards: 

1. Monitor Your Credit Score– Multiple loans and credit accounts can have a negative impact on your credit history, especially if you don’t make payments on time. If you have a good credit rating, you may be able to negotiate with loan providers for lower interest rates. This will help you repay debt faster, so keep a close eye on your credit score and rating. 
2. ConsiderDebt Consolidation – Use a debt consolidation loan or credit card consolidation loan to manage all your debt in one place. Keeping track of a single loan’s due date and EMIs is far easier than managing multiple sources of debt. You can also refinance existing debt with balance transfer credit cards or low-interest personal loans to reduce your interest burden. 
3. Give Personal Loans Priority– Even if your credit cards have higher interest rates than outstanding personal loans, make EMI payments for the loans first. Late payments on personal loan accounts have a more serious effect on your credit report than defaulting on credit card payments. If you don’t have enough money to pay both, prioritize personal loans over credit cards. 
4. Don’t Pay Dues with Credit– Taking a small loan for making repayments on existing debt may not seem that bad when money is tight. But, this is the quickest way to end up with more debt than you can manage, as well as a poor credit score. Instead, focus on maximizing your earnings and minimizing expenses, so you can pay down your debt sooner. 
5. Pay More Than Minimum Dues– Trim your budget to the bare necessities and pay as much as possible towards credit cards and loans to clear them faster. You should also make a habit of putting extra money or windfalls into these repayments. If you stick to making only minimum payments, you will never make much progress towards a debt-free life. 
6. Focus on Prepaying One Loan– Paying off one debt at a time is a good way to manage multiple loans and pay less interest. It also gives you a feeling of accomplishment, which encourages you to work harder at repaying debt. Prioritize accounts with the highest interest rate or lowest balance, and prepay these first while making minimum payments on the rest. 

If you’re ever hoping to be completely out of debt, it’s time to take charge of it. The problem isn’t going to go away on its own, but with the right financial strategy and serious commitment, you can definitely get it under control!