The debt fighting tools Americans are turning to now
There’s not a lot of dependability these days, but one thing you can (unfortunately) count on, is that next bill. Debt doesn’t seem to take a day off, even in a year like this. So it’s time to pay smarter. At LendingTree we see a lot of people look for loans simply to get a better deal on their existing ones. Are you overpaying on anything? Could you reduce payments or debt totals? What if you could actually save money when paying off your debt? It’s possible! Here are four ways we’ve seen people tackle their debt this year.
Refinance, with a side of cash
Obviously you’ll need to be a home owner for this. There’s a kind of refinance called a cash out refinance, where you actually refinance your home for a higher amount, then take the difference out in cash. You can then use that cash on whatever you want, and you pay it back by simply paying your mortgage. So for example, say you owed $200,000 and used a cash out refinance to refinance at $250,000. You’d end up with $50,000 to pay off higher interest debt, make home improvements and more. With refinance rates at historic lows, now’s the time to see what you could get.
Make that credit card debt personal
When so much of your payment goes to interest, it can be hard to take down debt, and that’s exactly what happens with credit cards. If you can swap that interest rate for a lower one, you’d be able to get rid of that debt faster. That’s the idea behind this tip. First you total up all your credit card debt, then you apply for a personal loan for that amount (yes, it’s more debt, but stick with us). Once you get your personal loan money, you pay off those credit cards, then you pay off your personal loan. The lower interest and fixed payment ends up saving you more money over time! This is probably the most immediate tool in this list—you could have your personal loan money in your account within 24 hours of approval!
Graduate from old student loans
You don’t leave college with one giant student loan bill, it’s usually several loans, sometimes from different lenders. Refinancing your student loans consolidates all of them into one single payment, which can often result in paying less over time, especially if you can get a lower interest rate. When you refinance your student loans you can go for a lower payment, or a shorter term. Student loans don’t have to be a part of your adult life forever. Refinance them and start taking back your finances!
Swap your mortgage for a better one
Home refinance rates are at historic lows. Even if you haven’t been in your house a long time, it’s worth looking at your refinance options. A lower rate could translate to hundreds saved each month, and thousands over the life of the loan. For many people, a mortgage payment is one of the biggest expenses each month. What if that expense could be a little less expensive? Now’s the time to see if you could swap your mortgage for a better one.