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The average American carries approximately $6,375 in credit card debt. For many, the stress associated with trying to pay off this high level of debt is significant.
If you find yourself in the group of people stressed about how to go about paying off credit card debt, you will be happy to learn there are some tips and tricks you can use. While your debt may seem insurmountable now, with time, effort, and dedication, you can get out of debt for good.
If you’re ready to learn what steps to begin taking, keep reading.
Are you carrying a balance on more than one credit card? If so, you need to make sure you are always paying the minimum required on each.
However, don’t stop there. Once the minimums are paid, you need to concentrate on paying down the balance on each card. Be sure you choose one card to focus on at a time.
You can choose the card with the highest interest rate to pay off first, or the one with the smallest balance. Both of these strategies are effective but choose the one that works for you, and then stick with it.
If you want to get out of credit card debt and stay out of it – for good – you have to take some drastic steps. One of these is to destroy the cards.
Regardless of what you think, there is no such thing as responsible credit card use. There is no good reason to keep these cards around, especially the department store cards that would not even be helpful in an emergency situation.
While this step may sound somewhat drastic, it’s the only surefire way you won’t get right back into credit card debt once you have paid everything off.
Another option is to consolidate your debt. You can combine several of the higher-interest balances into a single payment. In most cases, the transfer fee is going to be three to five percent, but you can compensate for this with the savings you are going to see from the transfer.
If you have any equity in your home, you may be able to use that to pay down your credit card debt, as well. Home equity lines of credit often provide a lower interest rate than what the typical credit card charges.
It’s important to understand that closing costs will apply. However, the benefit is that the equity interest payments are usually tax-deductible.
If you choose the consolidation path, remember, you need to control your spending. This can help you avoid accumulating new debt, along with the debt that’s just been consolidated.
If you are planning to pay off and destroy your credit cards, then you still need to ensure you have some type of safety net for emergency situations. This is where an emergency fund comes in.
Building an emergency fund can take some time, but it will also be valuable if you encounter an unexpected expense or some type of income disruption. All you have to do to create an emergency fund is put a little back from each of your paychecks. By doing this, you can avoid missed payments and the need to use a credit card in the future.
You need to get a handle on your budget and make sure you fully understand what it is and how you can make the most of it. For example, top priorities should be transportation, groceries, housing costs, and entertainment.
A great way to begin this reorganization process is by looking at your credit card statements, as most issuers categorize your spending.
Be sure you scrutinize this information closely. Find areas where you can cut back how much you are spending. Then take the money that you have “found” and put it toward paying down the debt you have.
If you are like most people, you didn’t get into credit card debt overnight. As a result, you are aren’t going to be able to get out of it that quickly either (unless you find a windfall of some sort).
Be patient and continue on the path to living a debt free life. While this is bound to take some time, in the end, it will be well worth it, and you will be in a position to take charge of your finances and finally achieve the financial freedom that you want and need.
There’s no question that paying off credit card debt is something that takes time. However, it’s possible when you use the right tactics and rely on the right information.
Be sure to use the tips and information found here, as they’re going to help you on your journey to financial freedom. You may also want to reach out to a financial advisor, who can provide you even more information on how to best manage your finances to remain debt free.
If you are ready to take control of your finances, rather than letting them control you, we can help. Our team can provide the information you need on any finance related topic. For example, we have a recent blog on how to take the pain out of monitoring your finances.
Stay tuned to our blog for more insights.
Did you know that Americans now have more debt than ever?
In fact, this debt amounts to a hefty $13 trillion–and this number is likely on the rise.
Debt can sneak up on all of us, especially given life’s range of expenses. Student loans, vehicle financing, and mortgages may grant education, mobility, and home ownership, but they still all equate to debt.
Luckily, if you are struggling with debt management, there are options. One of these is debt consolidation.
How does debt consolidation work, and is it right for you? In this post, we answer these questions and more.
Keep reading for insight!
Most people accrue debt from a variety of sources. You may, for example, have credit card debt in addition to an auto loan or home mortgage.
This is very common, and it’s not necessarily a problem. It is possible to have “healthy debt” if you are a responsible borrower and if you can comfortably make your monthly payments.
Yet healthy debt can be hard to come by. Plenty of loans have high-interest rates, which can quickly get burdensome and keep you from saving what you need to be saving!
A lot of people also juggle multiple monthly payments. It can be tough to meet these, especially if you’re living paycheck to paycheck. (In fact, most Americans do!)
Unexpected situations such as family emergencies or medical expenses can be an additional challenge. These can add more to your debt and stress levels.
If you find yourself missing payments on any of your loans, you may face late payment fees. Credit card balances are also subject to potentially high-interest rates.
Debt consolidation strives to alleviate the stress of these potential situations. When you consolidate your debt, you lump your debt into one, single loan. This results in just one monthly payment and–in most cases–less interest due.
Debt consolidation sometimes sounds too good to be true. How does it work?
First, it’s important to note that there are, in general, two ways to consolidate debt: with a credit card balance transfer or a debt consolidation loan.
Both of these have the same goal, which is to get all of your debt into one monthly payment. Plus, they also strive to reduce interest and fees.
For people with a lot of credit card debt, this is a great means of consolidating. Users simply transfer all of their debt to one credit card. They must then pay off this balance within a given time frame.
Most people will seek out new cards that offer a 0% balance transfer APR and/or a $0 balance transfer fee. Plenty of credit cards offer these terms!
These terms mean that balance transfers won’t be subject to any fees. Once you transfer a balance, you won’t have to pay interest on that balance for a given period of time (sometimes up to a year).
If you aren’t eligible for such offers for any reason, have no fear. You can always transfer your credit card balances. These, however, will be subject to APR and/or transfer fees according to your card’s terms.
For this reason, identify your card’s balance transfer terms before you make a decision.
Another way to consolidate your debt is to take out a debt consolidation loan.
With this, borrowers take out a loan valued at their total debt. Generally, this loan is fixed-rate, meaning that its balance will have the same interest rate for the entire repayment period.
With this debt consolidation loan, borrowers pay off all of their existing debt. They will then work on repaying that loan in a given amount of time, generally at a lower interest rate.
Debt consolidation loans are ideal only if they do offer lower interest rates and fees than a borrower is paying on other loans.
You can get debt consolidation loans from a variety of sources. What’s more, they don’t have to be called a “debt consolidation loan” to count. Low-interest personal loans can also suffice.
Debt consolidation can be a relief for most borrowers, especially when it comes to reducing payments, interest, and fees. But is it right for you?
In general, debt consolidation is ideal for people who could benefit from a single monthly payment (rather than several).
It’s also the right choice for individuals who aren’t 100% drowning in debt. In general, your debt shouldn’t be more than half of your current income. If it is, it will be really tough to pay off that debt, even after it is consolidated!
Credit score can also play a role. In general, people with good to excellent credit are more eligible for 0% balance transfer terms on credit cards and low-interest consolidation loans.
If you have a lower credit score, you may struggle to find a consolidation method that actually saves you money.
It’s also important to have a plan in place once you do consolidate your debt. This plan should incorporate income sources and repayment terms.
Remember: debt consolidation doesn’t get rid of your debt. It only reorganizes it, in an attempt to reduce interest paid.
If you’ve decided that debt consolidation is right for you, begin by choosing how you wish to consolidate your debt. Is credit card consolidation right for you, or is a debt consolidation loan the way to go?
Next, start researching. Take your time to identify the best balance transfer terms and/or low-interest consolidation loan.
If you do intend to take out a loan for debt consolidation, browse lenders wisely. There are a lot of scams out there when it comes to debt consolidation, so look only for reputable lenders.
We also recommend inspecting your credit score before you hunt for offers. Remember: the higher your score, the better for securing terms likely to make debt consolidation worth it.
How does debt consolidation work? Debt consolidation involves lumping all of your debt into one loan to reduce payments and interest.
In general, debt consolidation can be a useful tool for individuals with debt that doesn’t surpass half of their income.
Are you ready to consolidate your debt? Apply for a loan now!
Want to hear something scary? “The big mistakes are made in the financing office,” explains Phil Reed, senior consumer advice editor at Edmunds.com, the auto research website. “Making the right decisions can save thousands over the life of the loan.”
A car is a big purchase with a lot of moving parts. Dealers makes their profits between the gaps in buyer’s knowledge and they may try to confuse by unleashing lots of terms like “negative equity” and “origination fees.” Use these recommendations from experts to save thousands over the life of your car loan.
Don’t let the dealer define your credit score or credit “worthiness.”
Walk into the showroom with your credit report snugly in your back pocket. Otherwise, you run the risk that the salesperson leaves your negotiation only to come back with bad news about your credit. And of course that score isn’t high enough to get you the best rates. Who knows if he or she was checking your scores or playing a quick game of hacky sack? Dealers know that most consumers do not check their credit before being lured in by deals. Don’t make yourself vulnerable to this unethical treatment.
We discuss how to find your credit score easily in our previous blog post on rebuilding your credit (LINK). Just go to Annualcreditreport.com, fill out a few fields and your report arrives in you inbox instantly. Trust these results from the only free site authorized by the U.S. government’s Federal Trade Commission. Typically, anyone with a credit score of 720 or higher gets the lowest interest rates as they’ve demonstrated the most responsible money management. Still high 600s to low 700s is considered a “good” score. Those with lower scores can still get loans, but they will pay more in interest and fees.
Another way to check your credit is to get pre-approved from an outside lender like your bank or by applying for an online auto loan. If you can manage to shave just 1 percent from your car loan, you’ll pay hundreds less over the next five or six years.
Sure, the cash rebate feels enticing. And it might be the right choice if you use it to pay off other, higher interest loans like cash advances or credit cards. Basically, you need to decide if you want a lump sum up front or lower monthly payments over the next five or six years. Of course, not every car buyer is offered low-interest car financing, only those with the best credit scores. Again, know your score before you go to the dealership.
Some like to get new cars every two years. Often, they walk into the dealership with their auto loan “upside down.” That means they still owe more on the car than it’s worth. While those loving shiny new cars can get their next ride even if their loan is upside down, they’re putting themselves on a downward financial spiral.
Dealers don’t care what financial shape the car buyer puts themselves in. They will just add the negative equity–what you owe–into the purchase price of the new car. Chances are, this frequent buyer will just roll even more negative equity into the next new car, too.
Rather than enter this vicious cycle, consider buying a used car. A car loses much of its value in the first two years off the lot. And today, most cars are built to last 250,000 miles. Consider keeping the car longer and buying used to get the most for your car budget.
Just as movie theaters make most of their money on the popcorn, 37% of auto dealer’s profits come through aftermarket add-ons. These add-ons include extended warranties, fabric protection and paint sealant and they are always less expensive from vendors other than the dealer. These costs feel like a no brainer when amortized over the life of the loan. The salesperson is quick to tell you that they add just a few dollars to every payment. Still, even $20 more over 60 payments is an additional $1200–real money.
With the deal wrapping up, a buyer’s guard is down. Salespeople know this well. The deal takes so long for a reason. It’s at the end that a salesperson may bring up unusual fees that may have official sounding names. Review all of the legitimate fees here and don’t hesitate to push the salesperson to drop anything that sounds suspicious.
Better Business Bureau A+ rated First Financial has helped arrange over 1,000,000 auto loans, some with approved amounts of up to $45,000. We have loans for borrowers with all credit scores, even fair poor and bad credit. Take three minutes to apply here for a new or used car loan and get your answer fast!
There are some pretty sweet 2019 automobiles hitting the markets right now.
Acura redesigned their luxury compact RDX. Subaru is doing it’s Outback one better with its the 3-row Ascent SUV. Pickup trucks have been re-tooled as well. The compact Ford Ranger gets a sporty new design, and Chevy has modernized its powerful Silverado.
And then there are the high-tech features!
Internet connectivity, which sounded space-age just a few years ago now comes standard on many models. Apple CarPlay and Android Auto puts a range of entertainment and navigation options at drivers’ fingertips.
But before you let these new models and technological advances bewitch you, understand the trends in 2019 auto loans so you can get a deal.
Trend: Slowing car sales
Why?: Millennials and urban dwellers are avoiding buying cars because they find Uber and public transportation sufficient. Millennials also put less focus on material possessions reflect status. They are not enthusiastic buyers of cars OR homes.
For You:Car manufacturers and dealers will offer more incentives. Car prices will stay steady from 2018 to 2019.
Trend: Lower loan origination fees
Why?: Cloud processing, automated application review, and digitized documents mean dedicated, in-house loan analysts now have to get jobs at Subway. It also means lower labor costs for lenders.
For You: In the competitive auto loan market, lenders have to compete on price. Therefore, the buyer has more power to negotiate the 1% to 2% loan origination fee.
Trend: Eight-year car loans
Why?: Cars are lasting longer. Toyotas and Hyundais tend to get the most praise for working well after 200,000 miles. According to autobytel.com, however, American models like the Chevy Impala and Buick LaCrosse hold up well into the 200,000 mile range as well. “Every new car today is built to last a quarter of a million miles,” explains Mike Calkins, AAA technical services manager. Taxi drivers brag that their Priuses make it to 600,000 miles!
For You: Car buyers who like to keep their cars for a long time can get more car for their budget with an 8-year car loan. While they’ll be in for more interest payments, using that money in other better-performing investments offsets auto loan interest costs.
Trend: Rising interest rates
Why?: With the economy thriving, the federal reserve has raised the federal funds rate eight times since the end of the Great Recession. It’s now at 2.25%. Most economist predict “The Fed” will bump rates up three more times in 2019 and then at least once more in 2020. With a federal funds rate at 3.25%, you bet the average auto loan cost will rise.
For You: The tricky thing is, as happens with homes, when auto loan interest rates rise, car manufacturers tend to compensate with lower prices. They know about how much their consumers can spend each month on a car payment. Still, when you go into the dealership, don’t be surprised that the 1% interest rates have disappeared.
Are you in the market for a new or pre-owned car? Better Business Bureau, A+ rated First Financial has auto loans for all credit types, even bad credit! Since 1996, we’ve helped arrange over 1,000,000 auto loans, some with approved amounts of up to $45,000. Take three minutes to apply here for a new or used car loan at the lowest rates!
The small personal loan has gotten many out of difficult situations.
Unfortunately, death is a fact of life and often strikes at the most unexpected times. Not only is it hard to go through the emotional trauma of losing someone close to you, but making the funeral arrangements in just a few short days, while also figuring out how you’re going to pay for them is extremely rough. Funerals aren’t cheap, even with relatively affordable caskets the cost can still easily run up to the thousands. If the deceased person’s assets cannot cover the expense of the funeral service, taking out a small loan with a low interest rate is one of the best routes you can take to cover the cost and work your way towards paying it off.
Most people who receive a small personal loan get one to consolidate their debt. Consolidating your debt allows you to combine multiple types of debt, such as car loans or debt accumulated from credit cards, into one total loan with a fixed interest rate, consistent monthly payment, and a closed-end term. Doing this can have multiple advantages. It can lower the interest rate on the debt, and you may also qualify to have a lower monthly payment that is paid off over a longer period. Either way, consumers with multiple outstanding debts should definitely explore consolidation.
Another effective use of a small personal loan is to use it to pay off credit card debt. Of course, this may sound counterproductive, taking out a loan and possibly going into debt again just to pay off existing debt. However, many loans are available at a low rate, which limits the amount of interest you will have to pay, along with along with an end date to help you plan out your financial future. According to Ryan Bailey, who is in charge of consumer deposits, payments, and non-real estate lending at a TD Bank branch, who says that “With an unsecured loan, you pay it off in 5 years, generally at a much lower interest rate, so it saves payment, and you actually get it paid off.”
Life is unpredictable and sometimes you or a loved one may end up in the Hospital. Even with health insurance, costs can often be extremely high, especially for long stays. That is why so many people take out personal loans to cover unexpected health care costs. Don’t wait to do this – credit reporting agencies may be notified of missed payments and this will damage your credit score. A personal loan can allow you to pay off your medical expenses while keeping your credit score intact.
Did your old car suddenly break down and you need to buy a new one but don’t have enough money saved? Or can you afford one, but don’t qualify for a secured loan because of your credit history? A personal loan could very well be the answer. People who qualify for personal loans are more than free to put them towards a big purchase, such as buying a car, motorcycle, a small house or a boat.
Your wedding day will be one of the most unforgettable moments of your life, and it is totally reasonable that you may want to spare no expense. You already know the cost is going to add up quickly. Between the reception, the dress and tuxedo, to hosting possibly over a hundred guests, weddings are very expensive. This does not even include the cost of the rings as well as a possible honeymoon afterwards. Many couples look to personal loans to help them finance their big day. They can be used towards the expenses previously mentioned, and can ensure your wedding day will be one of the highlights of your life.
As you’ve gathered from reading this article, personal loans have many practical uses and cover a wide variety of expenses. First Financial knows how unpredictable life can be and how hard it is to keep a large sum of money sitting idle just waiting for something to happen. That’s why our loans cover more than just mentioned above. A small personal loan can also help you finance veterinary care for your pet. Or say a loved one in a different country has suddenly fallen very ill and you have to find a way to be there with them. Whatever it is, rest assured that our loans are consumer friendly with low interest rates and set end dates. In a perfect world, money shouldn’t decide if your pet can get a surgery to extend its life or if you can visit a sick relative, and with a loan from First Financial, it doesn’t have to.
Like any financial option, the cash advance serves consumers well when used properly. We reveal the best ways to manage the cash advance in our previous posts about when to use it and strategies to pay it off.
While a cash advance can help you keep your computer, car or apartment, some use a second cash advance to pay for the first and then get caught up in an ever increasing interest rate and fee cycle. This habit erodes your long-term financial health.
When you get your very first cash advance, to ensure you can pay it off, try to make these lifestyle changes:
While the cash advance does come in handy in many situations, before applying for a cash advance, make sure you can answer the following questions positively.
When considering personal loans, don’t forget that online lenders have the automation and reduced overhead to offer the best loans and terms. First Financial is the national leader in providing cash advances for borrowers of all types, even bad credit borrowers. Just fill out some forms, upload documents and get the money in your account in a matter of days. The Better Business Bureau rates First Financial A+ because we make customer service our highest priority.
Many consumers have received phone calls explaining that they can settle their credit card debt for a fraction of its total. While this is possible, taking the debt settlement route can have negative consequences on your long-term financial health.
Debt settlement works this way: a company acts as an intermediary, making calls to your credit card company or another creditor for you.
The personal loan, on the other hand, is simply a lump sum of money you win from a bank or alternative lender after filling out an application form and submitting some financial documentation.
But to further guide you in deciding which path to take, here are the risks and rewards of debt settlement versus the personal loan.
Debt settlement comes with the following potential risks.
A debt settlement company negotiates with your creditor to demand less money that what you actually owe. Your creditor, in turn reports this event to the credit bureau, explaining in detail that your debt was settled for less than how much was owed. Credit bureaus degrade your credit score. Further, seeing this history future car, home and bank lenders will be reluctant to do business with you.
The money you escaped paying isn’t the free pass debt settlement companies imply. The IRS will demand a slice of this “discount” in your taxes. You will pay taxes on it as if it is income. Your debt settlement company sends information to the IRS and to you. In fact, if you do choose to use a debt settlement company, make sure to ask up from what the tax implications are.
Debt settlement does help consumers reduce their debt. Also, when you try of applying for a loan when you still have not fixed your debt yet, you are certainly going to have a hard time. As a matter of fact, lenders are highly unlikely to be willing to work with you if this is the case. But when you do eliminate your debt, you will be attracting more lenders to work with you and even open up a lot of other opportunities for your own success.
Giving your lender a lesser amount of the amount owed leaves more money for you to use to buy a car, home or other asset. Make sure you maximize the amount forgiven you will only be successful in this when you have already mastered the labyrinth of debt settlement.
Aggressive creditors can make your life a nightmare. Even more frightening, when you do not respond, they file a lawsuit which could be served in public and end up garnishing your wages. Debt settlement puts this interference to a stop.
Many are surprised that personal loan rates are typically sometimes twice as high or higher than home and auto loan rates. The better your credit score, the lower rate you will get. Still, those with personal loans pay a lot of end their creditors calls.
Some lenders charge high penalties if you pay the loan off early. Make sure to read the terms and regulations of the contract or ask your loan officer. First Financial personal loans never have penalties for early pay off.
A personal loan should be simple: you apply for a personal loan, the company pays for your debt, and in turn, you will be going to pay the company. View additional fees or meeting with bankers with suspicion.
The thing about having a personal loan is that it can pay off your credit card debt in no time. The credit bureaus also see this move as a commitment to pay the debt rather than escape it by going into debt settlement. This move reveals your habits of paying your debts and impresses lenders.
A personal loan does not require property for collateral. Therefore, if you do default on it, you aren’t at risk for foreclosure or repossession.
When considering personal loans, don’t forget that online lenders have the automation and reduced overhead to offer the best loans and terms. First Financial is the national leader in providing personal loans for borrowers of all types, even bad credit borrowers. Just fill out our simple application form, and get the money in your account in a matter of days. The Better Business Bureau rates First Financial A+ because we make customer service our highest priority.
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