When properly managed, debt can be a useful financial tool, but when debt is not used properly or excessively, it can become a huge concern for you and your household and can cause stress for those involved. If you feel stressed over the level of debt you have, then that may be a sign you need some financial advice.

A good debt strategy is always a good idea no matter the size of your debt. It can include debt consolidation, refinancing, or other strategies listed below.

What is debt consolidation?

Debt consolidation is a debt strategy to use a lump sum amount to pay off multiple other debt products. It's best used when the new loan is at a lower interest rate.

Example.

You have Credit Card 1 with $5000 at 19.99%,and Credit 2 with $7000, a carloan with a balance of $25,000 and a Line of Credit with a balance of $16,000.

• VISA with $5000 balance at 19.99%
• VISA with $7000 balance at 20.99%
• Car Loan with Balance of $25,000 at 8.99%
• Line of Credit with Balance of $16,000 at 11.99%

Your total balance is $53,000. Let's assume that your total monthly payments are $1500 per month.

A consolidation strategy would be to go to your local bank and ask for a loan. If approved, your bank would give you a consolidation loan to pay off all or some of your debts. Usually, loans are at a lower interest rate than credit cards. Using a loan interest rate of 9% and term of 5 years, your monthly payment would be reduced to $1,100/month. This would save you interest in the long run, PLUS increase your monthly cashflow.

How much debt do you have?

Take the time to add up all your outstanding balances for your debt management plan. You may be relieved to know it’s not as bad as you thought. In other cases, it’s better to know so you can develop a plan.

Products to help consolidate debt

A TD advisor can help you build a debt management plan and help you explore some of TD market-competitive financial products:

1. Personal Loan

A personal loan is used in the example above. You'll get your funds up front with fixed periodic payments that fit your budget. You can pay off your loan at any time without any fees or chargers.

2. Personal line of credit.

A Personal Line of Credit can help you pay off your debts with flexible payments and competitive interest rates while providing ongoing access to available credit for future use.

3. Lower-interest credit card.

Consolidating higher-interest credit card balances into one lower-interest credit card balance is an option you might want to consider.