From 2019 to 2020, more people left the state of California than moved to it. Why might this be? There are many potential reasons why someone might decide to move out of the Golden State, but high cost of living is certainly a major factor for many residents. With some of the highest costs for essential living expenses — like housing, groceries, transportation, taxes and more — many people are finding themselves in financial hot water, especially when you add the extra economic strain of the pandemic into the mix.

This is all to say that many Californians are currently dealing with growing levels of debt. If you’re in this same boat and have found trying to pay down debt on your own is not making a large enough dent in what you owe, consolidation may help.

What does debt consolidation entail and where can you find these services in California?

Ins and Outs of Debt Consolidation Loans

According to ValuePenguin, the average credit card balance in California in 2020 was just over $5,100. What makes credit card debt particularly tricky is its high average interest rates. Carrying over even a few thousand dollars as a month-to-month balance at an interest rate around 15 to 20 percent can add up fast — meaning it’ll take even longer and require more money to pay off those credit card balances.

Debt consolidation loans are personal loans that may have a lower annual percentage rate (APR) than the average credit card. Borrowers able to qualify for this type of personal loan at a competitive interest rate can then use those funds to pay off whatever they owe on credit cards in one fell swoop. This frees them up to focus on repaying the loan in fixed monthly installments until it has been repaid. Effective debt consolidation not only streamlines these monthly payments into one recurring amount, but also can lower the interest charges paid over time.

This form of California debt relief may be advantageous for borrowers who:

  • Are struggling with high-APR debts, like credit cards and medical bills
  • Have a strong enough credit rating to qualify for a low-interest loan.
  • Can budget and make lifestyle changes so as to avoid amassing more debt while still paying back the consolidation loan.
  • Have enough debt that repaying it the traditional way would take years, but not so much that a more intensive option like debt settlement or bankruptcy would fit better.

They key to achieving success with consolidation is committing. The repayment period for most loans lasts between one and seven years, during which you’ll need to make monthly payments on time or risk defaulting — and ending up in an even worse financial position than before.

Where to Find California Debt Consolidation Loans

Where can Californians seeking out debt consolidation find these types of loans? Borrowers have a few options when it comes to consolidating: Banks, credit unions or online lenders.

There are advantages and disadvantages to each option. For instance, using your local credit union may be most advantageous if you have been a loyal member for years. You’ll know exactly where to call or visit if you have questions along the way.

The upside to working with a bank located in the state of California is that you know they work with residents of the state. When it comes to online lenders, on the other hand, certain states may be excluded from their range of services. The benefit of using an online lender is often flexibility — these companies may even approve borrowers who are unable to get a loan from a bank or credit union due to more flexible credit requirements. The customer service, then, will take place only online if you go this route.

Californians struggling with overwhelming debt can find consolidation services through banks, credit unions and online lending companies.