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3 Creative Digital Ways to Pay off Debt and Boost Financial Confidence
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The pandemic shined a spotlight on two major money concerns: the ability to pay off debt and confidence in financial health. Digging out of credit-card debt while stockpiling pandemic supplies left many Americans financially insecure, so now is the time to take steps to bounce back.
Many Americans started the year in a sticky financial situation. About 8 of 10 Americans living in the 50 biggest metros started 2021 in credit-card debt, with a median outstanding balance of $3,239. Furthermore, a survey on stockpiling winter pandemic supplies showed that 27% of Americans have incurred credit-card debt from purchasing pandemic supplies.
Debt and insecurity go hand in hand. Even with the availability of the coronavirus vaccine, 15% Americans felt they would never recover their financial position again. This negative outlook toward the post-pandemic world requires more creative payoff solutions beyond typical strategies of budgeting and saving.
While budgeting and saving are the foundations to debt payoff and financial health, exploring alternative payoff methods can help. LendingTree uncovered three creative solutions consumers can explore from the safety of their homes.
Unlike paper money or “fiat” money, gold cannot be produced at will by the government or central banks. This makes gold a very resilient currency, which can provide consumers with a sense of financial security. There are companies, like CORO , that allow consumers to buy and sell gold through a digital platform. Gold can be used as a saving strategy and the balance can be used for withdrawals at any time.
“While gold does not pay an interest rate like a traditional savings account, gold does consistently appreciate over long periods of time,” said David Dorr, CORO co-founder, president and CEO. “Placing a portion of savings in gold builds confidence because gold has historically protected savings against inflation and currency devaluation. Since 1971, the U.S. dollar has fallen over 97% against gold. A long-term plan that involves saving in gold is beneficial for anyone around the world.”
CORO strives to bring back gold as currency and make it accessible to anyone regardless of the size of their accounts.
Cryptocurrency offers a fully digital alternative to paper money that is secured by cryptography and is not controlled by the government or central bank. With cryptocurrency being accepted by retailers such as Whole Foods, Nordstrom and Office Depot, it is a potentially attractive option for those who have lost confidence in the U.S. dollar.
However, investing carries risk, and so consumers need to do their research and evaluate their options carefully. There are hundreds of cryptocurrencies available, as well as dozens of apps on which consumers can invest in cryptocurrency, such as Abra, eToro and Gemini. The most visible cryptocurrency is Bitcoin.
- Abra is a crypto banking service that allows consumers to buy, store, trade, send and earn interest on crypto and U.S. dollar deposits. Bitcoin can be used to pay off credit-card debt. “By connecting your bank account to your Abra wallet, you can sell Bitcoin into U.S. dollars and then transfer that money to your bank account to pay off any debts you may have. The process is similar to what you probably already do if you have a Venmo or PayPal account,” said Bill Barhydt, CEO and founder of Abra. “Yes, Bitcoin can be short-term volatile and it’s definitely not for everyone, but for those who do a little homework it has proven to be a fantastic investment.”
- eToro is a cryptocurrency trading app that offers users the ability to copy other eToro traders. This CopyTrader technology allows the user to choose a trader to copy and set an amount to trade. eToro provides a Trading Academy to educate investors on the various cryptocurrencies, which can help boost financial confidence.
- Gemini is a platform created to help individuals and institutions buy, sell and store cryptocurrency. Gemini prioritizes security by undergoing regular bank exams and cryptocurrency audits by the New York Department of Finance Services. The platform strives to educate customers with resources such as its Cryptopedia. Gemini also features a credit card that allows its customers to earn cryptocurrency with every purchase.
Balance transfer cards
Paying off credit debt by opening another credit card may not sound intuitive, but it provides a creative way to save on interest charges and pay off debt sooner. A balance transfer credit card allows you to transfer a portion or all of your credit card debt and take advantage of 0% APR introductory period for a specified period of time. The key to this strategy is to evaluate the available credit limit, introductory period and any balance transfer fees. Ideally, consumers should find a card with a long introductory 0% APR period and either no or a low balance transfer fee. The ability to apply your entire payment toward the principal of the debt instead of principal plus interest can help speed up your debt repayment efforts and potentially save you hundreds in interest charges.