Looking to clean up credit card debt? There are actually several ways to get it done – some you might not have thought of. Here are the top five suggestions from Visions Federal Credit Union's Debt Experts.
The personal loan is your likeliest solution for debt consolidation. The goal is to combine all your balances (and their associated APRs) into one loan at a better rate. It not only saves you tons of interest, but simplifies your payments as well.
"I had a member who was paying over $1,000 a month on credit card debt," says Kham Phonechanthasone, Visions Debt Expert and Assistant Manager of the Binghamton University and University Center Branches in New York. "I helped her consolidate them into a personal loan and was able to save her over $500 a month."
"She was thrilled to be able to have extra money in her pocket and know that it will be paid off in five years or less," she says.
Home Equity Loan
This is not always the most obvious solution, but a solid one if you've been in your home for a while. Debt consolidation is a great way to utilize your home's equity as, like the personal loan, you can combine, save, and simplify multiple lines of credit.
"I find my go-to is to talk to members first about our home equity loans as Visions offers great rates," says Lindsay Kennedy, Visions Debt Expert and Manager of the Muhlenberg, Pennsylvania Branch. "I think people often forget about home equities to help consolidate."
"I often say that you work hard to pay for your home and to accumulate equity, so sometimes in certain situations, it's time for your home to help return the favor by alleviating some of your financial obligations," she says.
You may also leverage your home's value when you refinance to knock down mortgage payments and free up some extra cash. You can even do a cash out refinancing in some instances, which puts money right in your hands to clean up debt.
It may seem counter-intuitive at first, but if you're prepared to keep your spending under control, consolidating multiple cards and rates to a new line of credit with a low or no APR can really work. There are plenty of cards out there with great promotional rates or other incentives and a Debt Expert can help find one that improves your payment situation.
Cash Out Auto Refi
If you don't own a home, you might also look to your vehicle to put cash on hand with an auto refinance. At Visions, you can refinance your auto loan and "cash out" based on up to 100% of your equity.
"One thing people might not think of is you can do a cash out auto refinance," Phonechanthasone says. "If you have enough equity on a vehicle or you own the vehicle outright, you can take equity out of it to pay down other debt at a lower interest rate."
Visions understands the value of having local Debt Experts across the areas the credit union serves. That's why they made it a point to place Debt Experts in every community they are a part of. These experts are passionate about what they do.
"There are the members who come back to us and state how much we really helped them and we see them achieve their financial goals because we were able to help them," Kennedy says. "It's hard to put a dollar amount of savings to a successful debt consolidation, as a $50 a month savings may not mean too much to one member, but to another that's their peace of mind and security."
So, if you find your monthly payments are too high or you think you can lower your interest rates, it's likely time to consolidate. And if you're ready to become debt-free, you can lean on the Debt Experts at Visions for help.