Latest news with #debtconsolidation
CBS News
20 hours ago
- Business
- CBS News
How to consolidate $50,000 (or more) in credit card debt without hurting your credit
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. Consolidating $50,000 in credit card debt can be tricky, especially if you want to keep your credit score intact. Getty Images If you're buried under $50,000 or more in credit card debt, you're likely feeling some serious financial strain. For starters, the minimum payments on that high of a balance will barely make a dent and the compounding interest charges are relentless. Plus, juggling multiple balances each month can be downright overwhelming. And now, with credit card APRs hovering near record highs — averaging about 22% currently — it's easy to see how your credit card balances can balloon even faster than you can pay them down. You aren't the only one facing this type of issue, either. The total amount of credit card debt nationwide recently surged to $1.18 trillion, according to data from the Federal Reserve Bank of New York. And while inflation has cooled significantly compared to recent highs, the costs of everyday goods are still high, forcing more people to lean on plastic to cover basic expenses. For those dealing with credit card balances of five figures or more, debt consolidation can offer a much-needed reset by simplifying the repayment process and lowering your interest costs. But here's the tricky part: When you owe this much, the wrong move could do more harm than good, especially when it comes to your credit. So if you're thinking about consolidating $50,000 (or more) in credit card debt, it helps to understand the ways you can do it without wrecking your credit score. Find out how to start tackling your high-rate debt now. How to consolidate $50,000 (or more) in credit card debt without hurting your credit Depending on your credit profile and financial situation, the following options can help you get out from under that mountain of debt without damaging your credit health: Take out a personal debt consolidation loan A personal loan is one of the most straightforward ways to consolidate high-rate credit card debt, especially if you have strong credit and a solid income. These unsecured loans let you pay off all your cards at once and replace them with a single fixed monthly payment. How it works: You apply for a lump-sum personal loan, use the funds to pay off your credit card balances, and then make one consistent monthly payment towards the loan for a set period. The big benefit is that interest rates on personal loans average about 12% currently, so this move could help you save a significant amount on the interest charges. You apply for a lump-sum personal loan, use the funds to pay off your credit card balances, and then make one consistent monthly payment towards the loan for a set period. The big benefit is that interest rates on personal loans average about 12% currently, so this move could help you save a significant amount on the interest charges. Why it helps your credit: Once your credit cards are paid off, your credit utilization Once your credit cards are paid off, What to consider: Many lenders cap personal loans at $50,000, so if your total credit card debt is higher, you might need to combine this option with others or look for lenders who offer higher limits. You'll also want to make sure the loan terms don't come with steep origination fees or early repayment penalties. Learn more about your debt consolidation options today. Use a home equity loan or HELOC If you own a home and have built up equity, you may be able to borrow against it to pay off your credit cards. Home equity loans and home equity lines of credit (HELOCs) often come with significantly lower interest rates than credit cards or unsecured loans because they're secured by your property. How it works: With a home equity loan, you get a lump sum and pay it back in fixed installments over time, which is ideal if you need to consolidate a specific amount. A HELOC, on the other hand, works more like a credit card: You borrow as needed up to a certain limit and only pay interest on what you use. With a home equity loan, you get a lump sum and pay it back in fixed installments over time, which is ideal if you need to consolidate a specific amount. A HELOC, on the other hand, works more like a credit card: You borrow as needed up to a certain limit and only pay interest on what you use. Why it helps your credit: Like personal loans, using home equity to pay off credit cards can dramatically lower your credit utilization ratio. And because these loans don't count as revolving debt, they can help your credit profile appear more balanced and stable. Like personal loans, using home equity to pay off credit cards can dramatically lower your credit utilization ratio. And because these loans don't count as revolving debt, they can help your credit profile appear more balanced and stable. What to consider: This option only works if you have enough equity in your home, and you'll need a good credit score to qualify for favorable rates Work with a credit counseling agency For those with less-than-perfect credit or limited borrowing options, a credit counseling agency can be a helpful lifeline. These agencies offer debt management plans that bundle your unsecured debts into one monthly payment and often come with reduced interest rates negotiated on your behalf. How it works: After reviewing your financial situation, a certified counselor sets up a debt management plan, usually with lower interest rates and waived fees. You send one monthly payment to the agency, and they distribute it to your creditors. After reviewing your financial situation, a certified counselor sets up a debt management plan, usually with lower interest rates and waived fees. You send one monthly payment to the agency, and they distribute it to your creditors. Why it helps your credit: Unlike debt settlement, these plans don't require you to stop paying your creditors. That means your accounts remain in good standing (or return to good standing over time), helping you avoid the major score drops that come from charge-offs or collections. Unlike debt settlement, these plans don't require you to stop paying your creditors. That means your accounts remain in good standing (or return to good standing over time), helping you avoid the major score drops that come from charge-offs or collections. What to consider: Some creditors may freeze your accounts while you're on the plan, which could slightly reduce your available credit. But overall, your credit score is likely to improve as you make consistent on-time payments. The bottom line Consolidating $50,000 or more in credit card debt is a serious move, but if done wisely, it can help you break free from financial stress without wrecking your credit. To do that, though, you'll need to choose a strategy that fits your credit profile, income and long-term goals. But whether you qualify for a personal loan, can leverage your home equity or need help from a credit counseling agency, there are paths forward. So, take the time to explore your options, and don't be afraid to ask questions. The right move today can lead to financial freedom tomorrow.
Yahoo
2 days ago
- Business
- Yahoo
What debts can be consolidated? 4 types to consider combining
Unsecured debt, such as credit cards, student loans, medical bills and high-interest loans can all be consolidated. Debt consolidation can simplify your bill-paying strategy by consolidating multiple accounts into one new loan with a single payment. Consolidating debt can save you money on interest and help you get out of debt faster, depending on your situation. If you have a variety of different types of debt, you may be wondering which can be combined. Most people will consolidate one or a combination of the following four types of debt: credit cards, student loans, medical debt and high-interest personal loans. Knowing which debt you can consolidate — and when it makes sense to — can put you on track to save money on interest, pay debt balances off faster or both. Combining credit card debt is typically the most common reason people take out a debt consolidation loan. Borrowers often rack up credit card balances during the holidays, to cover emergencies or to make ends meet. Carrying balances on multiple cards can make it more likely that you'll forget a payment, carry balances too long and ultimately lower your credit score. Consolidating credit card debt has financial benefits that include cost savings, potential credit score improvements and paying your debt off faster. Credit card rates are typically very high. The average credit card rate is over 20 percent, compared to debt consolidation loans, which are typically much cheaper. For example, the average rate for a personal loan is about 12.65 percent. If you paid off $10,000 worth of credit card debt that had a 20 percent APR with a new 60-month personal loan with a 13 percent rate, you could save a bundle compared to making minimum payments on your credit cards. Credit card Personal debt consolidation loan Total interest paid $16,056.59 $3,651.84 Monthly Payment $266.67 $227.53 Months to pay in full 364 60 The personal debt consolidation loan saves you $12,404.75 over the life of the loan, $39.14 per month in payment and pays your loan off 25 years faster. Credit cards are a type of revolving credit. When credit is revolving, it means you can reuse it, again and again. You also have a minimum payment option, which usually pays little more than the interest charges each month. These two features often keep borrowers in credit card debt longer than they would be with an installment loan like a personal loan. With an installment loan, you receive all of your funds at once and pay the balance off over a fixed period. Most personal debt consolidation loan terms are between two and five years. That gives you a definite payoff date since the balance doesn't revolve like it does with a credit card. Keep in mind: If you have excellent credit, you could qualify for a low-interest personal loan with rates as low as 6.5 percent, allowing you to pay off your debt in a significantly shorter amount of time. High credit card balances hurt your credit scores. Thirty percent of your FICO Score is set by how much of your available revolving credit you're using, also known as your credit utilization ratio. The more you use, the more it can drop your credit score. With a personal debt consolidation loan, you replace revolving credit balances with an installment loan, which doesn't impact your credit utilization ratio. Consolidating your debt and making the monthly payments is a sure-fire way to quickly increase your score by lowering your utilization levels. Bankrate insight Financial experts often recommend a balance transfer credit card to pay off your outstanding credit card debt. With good credit, you may qualify for a balance transfer offer with an interest rate as low as 0 percent for six, 12 or even up to 24 months. One caveat: Since the new balance transfer card is still a revolving account, the credit score benefit might not be as significant as using a personal loan. Even worse: If you don't pay down the balance by the end of the offer period, you could find yourself stuck with more high-interest debt down the road. Student loan consolidation is a popular option for recent graduates who may have several student loans from pursuing undergraduate or even graduate degrees. However, consolidation is only possible for federal student loans taken out through the Department of Education. You may be able to consolidate both federal and private loans by refinancing with a private student loan lender. If you have excellent credit, private student loan refinance rates may be lower than what you're paying on your federal loans. See related: How to consolidate student loans You may be able to lower your rate, spread out your loan term to lower your payment or simplify your monthly bill payments to just one student loan. It's important to remember that you'll lose access to federal student loan benefits if you use a private refinance loan. You won't typically save money on a federal student loan consolidation, since the rate is the weighted average of your existing loans. Your best bet for a lower student rate is to boost your credit score as high as possible, so you're eligible for the lowest private student loan refinance rates. The Direct Consolidation Loan program allows you to spread your payment out as long as 30 years, which could give you a substantially lower payment on your federal student loan balances. You may also be able to combine your federal balances with a private student loan refinance, with some lenders offering terms over 20 years in special cases. Just remember: The longer you take to pay the balance off, the more total interest you will pay. If you took out multiple student loans to complete an extensive education, you may have quite a pile of outstanding accounts to keep track of. By reducing your number of outstanding accounts, you might see your credit score improve a few points, since the number of outstanding accounts makes up 10 percent of your credit score. Bankrate insight Consolidating your student debt can also save your credit report in the long run if you miss your monthly payment and it shifts to delinquent status. When you consolidate, you only have one loan and therefore only one account will have a delinquent payment report. One late payment still isn't good for your credit score, but it's less damaging to your credit health than late payments on several student loan accounts. According to findings from the most recent West Health-Gallup Survey, 12 percent of Americans had to borrow money in the past 12 months to pay for healthcare for themselves or someone in their household. If you're sitting on dozens of unpaid bills and getting past-due notices, consolidating the debt may be a solution. Simplifying your payment schedule can remove a stress burden while you or a family member recover from a medical event. You'll have an easier time keeping track of bills, and may even realize some credit benefits if you end up avoiding collections for unpaid bills. Personal loans can be a good method of consolidating medical debt if the payment options offered by providers are too expensive. A 0 percent interest credit card may also get the job done at a low cost, if you can pay the balance off within the no-rate promotional period. On the downside, consolidating medical debt means you'll most likely pay interest on it — at least if you pursue the personal loan route. Still, if these bills have been sitting there for a while, it may be worth a try. If your medical debt totals $500 or more and has been unpaid for a year or more since your doctor's appointment, the balance could be sent to collections, hurting your credit score. You can avoid getting negative marks on your report by consolidating the debts before they become excessively late. If you recently took out several high-interest-rate bad credit personal loans to consolidate credit card debt and improve your scores, it may be time to look at combining them into one new personal loan. Personal loan rates range from 6.5 percent to 36 percent, and even an improvement from bad to fair credit could reduce your personal loan rate by 5 to 10 percentage points. Having more than one personal loan can put a strain on your budget, and the fewer payments you have to keep an eye on, the less chance you'll miss a payment. Plus, if you've been diligently taking steps to improve your credit score, it may have improved enough that you qualify for a much lower rate. The most common reason to pay off several personal loans with a new one is to get a better interest rate. That said, the lowest rates typically go to borrowers with excellent credit for terms of three years. Make sure you can handle the higher payment that comes with a shorter term to avoid taking on a debt you can't afford. If you had to take out a short-term loan to qualify because of bad credit, but your credit scores have since improved, you may qualify for a longer term on a new personal loan. You'll pay more in total interest, but you can apply the extra monthly savings to the loan balance or boost your emergency savings account if it's running low. There are not many types of debt that can't be consolidated. Although we've covered credit cards, student loans, medical debt and personal loans here, you can also consolidate secured boat loans, auto loans and even mortgages on multiple homes. However, the ultimate goal should always be to save more and borrow less. Debt consolidation — if used wisely — can be a helpful tool to get your debt under control and paid off as quickly and cheaply as possible. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
How do debt relief programs work?
Debt relief typically takes one of three forms: debt settlement, consolidation and management. Working with a debt relief company can result in less debt or a faster payoff — but there are often hefty fees, often up to 25 percent of the debt enrolled, attached to the services. Working with a debt relief company also often results in credit damage due to stopping payments during negotiations. Not every debt relief company is legit, so be prepared to research any company you consider. If you're struggling to pay off your debt and at risk of defaulting, a debt relief company may be able to provide assistance. Debt relief can come in a few forms, including self-driven ones, but a credit counselor or debt relief company can help you tackle the process. However, you'll pay a fee for a debt relief company's services. Debt relief companies are for-profit institutions that help you manage and pay down your debts. Depending on the company and what services are offered, they may work with creditors to help you get out of debt for less than what you originally owed. Most debt relief companies charge a hefty percentage of your discharged debt as a fee for their services. Each company offers different services. Some of the most common debt relief options include debt consolidation, debt settlement, credit counseling and debt management. Debt relief companies exist to help consumers lower their debt or better manage their repayments — for a fee. Most relief companies require an initial consultation to determine eligibility and to decide which method is best for you. However, it's important to walk into the process prepared by knowing all your options. Often, companies ask you to stop paying your debts to give them leverage to negotiate with your creditors and get parts of your debts settled. Then, they help you build a plan to repay your remaining balance. It is illegal to charge an upfront fee for debt settlement services. These fees should only be charged once your debts have been settled or resolved. More than that, if any business guarantees it can settle your debt, take your business elsewhere. This is a sign that the organization may be a debt relief scam. Or, you may instead opt to get a debt relief company's advice on how to manage your debts to avoid missing payments and pay them off faster. However, it's recommended you seek a nonprofit credit counselor for that kind of service. They typically charge lower rates and will not try to sell you additional services. Debt relief programs and debt consolidation Some debt relief programs will have the option to consolidate your debt. Debt consolidation can save you hundreds or even thousands of dollars in interest. Working with a debt relief program is just one way to explore your debt consolidation options. You can also explore self-driven options. Certification, fees and repayment time are the three main factors to prioritize when comparing debt relief companies. Certification: Any debt relief company should be backed by the National Foundation for Credit Counseling and the Financial Counseling Association of America. If the company lacks these certifications, you'll want to take your business elsewhere. Fees charged: Most debt relief companies will charge a fee between 15 percent and 25 percent of the total debt enrolled for settlement. Companies may also charge fees for opening and managing the savings account required to make payments. Repayment timeline: It typically takes between two and four years to complete a debt settlement program. This is based on the total amount of debt and creditors you have. Check the website to make sure the predicted timeline matches your needs. While debt relief can provide a path to taking control of your finances, there are also drawbacks to consider when taking this step, including: Impact on your credit score: The debt relief process may require that you stop paying your creditors for a period of time to better negotiate with creditors. During this time, your credit score will take a hit for lack of payment. Fees: Some debt relief companies charge fees, but these fees should only be charged once your case is settled. Look for a nonprofit counselor to potentially avoid these. Scams: There are scam companies working in the debt relief industry that may charge you money without actually helping to resolve your debt. Increased debt: While you stop paying your bills during the negotiation process, your credit cards or other debts could incur late fees and end up increasing your debt. In addition, any settlement fees will be added to the overall amount you owe. There also may be tax ramifications associated with forgiven debts. If you owe $10,000 on a credit card and that debt is reduced during settlement to $5,000, then the IRS may consider the forgiven $5,000 taxable income. Debt relief may be a good option for those facing potential default or bankruptcy. Just make sure you vet the company carefully to weed out the red flags, like upfront fees or settlement guarantees. And remember that some debt relief company services come with inherent risks to your credit score. If you ask the company to negotiate a debt settlement, you'll take a credit score hit when you stop taking payments — whether the creditor agrees to work with the relief company. Do debt relief companies charge fees? Yes. Debt relief companies charge fees in exchange for their services. The amount you're charged depends on the company you work with and the relief method you choose. Keep in mind that legitimate companies should never ask you to pay fees upfront — if you're asked to provide this, it's likely a scam. How long will debt relief affect your credit score? Working with a relief company will typically result in an immediate negative impact on your credit score. The degree to which your score drops depends on the relief method you choose and whether your creditors decide to report it. Is debt relief good or bad? In most situations, debt relief isn't something that will be immediately good for your finances. For one, it's often a costly undertaking due to the fees charged by the companies. It also has negative impacts on your credit score. Even as you rebuild your credit score, the forgiven debt will linger up to seven years on your report. But in some situations, it may be the only way to avoid bankruptcy. When considering whether to pursue debt settlement, you should also look into credit counseling from a nonprofit agency. How do I qualify for debt relief? Consumers who have a qualifying type and amount of delinquent debt can generally qualify for debt relief. However, each company has different approval and minimum debt criteria.
Yahoo
3 days ago
- Business
- Yahoo
5 strategies to pay off your loan faster
If you took out a personal loan to cover a big expense or consolidate high-interest debt, you're not alone. Personal loan balances in the U.S. amount to $251 billion, according to TransUnion's most recent Credit Industry Analysis report, up from $167 billion three years prior. Personal loans are a flexible tool to get your finances in order, but taking out a personal loan also means another monthly payment to manage. If you'd prefer to pay off your loan early to save on interest, here's what to know. This embedded content is not available in your region. Paying off a loan early has its benefits, and there are several strategies you can employ to accomplish this goal. But before doing so, read your loan paperwork carefully to ensure that your loan doesn't have any prepayment penalties. This can help you avoid any unpleasant surprises. Whether you only kick in a few dollars or round up to the nearest hundred, paying a little extra on your monthly payments makes a big difference. Not only will you pay off your personal loan early, but you'll also reduce your interest costs over the life of the loan. You can also apply this strategy to other loans, such as your mortgage or credit cards. For instance, if you borrowed a $10,000 personal loan with a five-year term and a 9.5% interest rate, paying $100 extra every month shortens your repayment period by 22 months and saves you more than $1,000 on interest. If you've stumbled into a sudden inheritance or a big bonus at work, put some of that cash toward your personal loan. Just ensure you ask your lender to apply the payment directly to your loan principal, as some lenders don't automatically do this. By reducing the principal balance, the amount you owe in monthly interest costs will decrease too. Before making a lump sum payment, make sure your windfall isn't better used paying down credit card debt or other high-interest debt. Read more: Personal loan vs. credit card Lenders sometimes let you split one monthly payment into two equal biweekly payments. While this doesn't seem like it would help you pay your loan off faster, paying every two weeks instead of once a month actually amounts to one full extra payment each year. This could help you save significantly on interest, especially if you have a personal loan with a longer term. Ask your personal loan lender if biweekly payments are an option for you. Read more: How to choose the right personal loan term length When you're between a rock and a hard place, you take the interest rate you can get instead of the one you want. This often happens if you use a personal loan to cover an emergency expense, such as urgent home repairs. Fortunately, you have some recourse if you have a loan with a high annual percentage rate (APR). If you've improved your credit score since taking out your personal loan, you might be able to refinance for a lower rate. Of course, this also depends on the current interest rate environment — refinancing doesn't make sense if rates are generally higher than when you borrowed initially. Keep an eye on your credit score and credit report, and when the time seems right, compare refinance rates with multiple lenders. Even shaving a point or two off your rate can mean keeping hundreds of dollars in your pocket, as long as the refinancing fees don't eat up all your savings. Be sure to ask prospective lenders about their fees before moving forward with a personal loan refinance. Read more: What credit score do you need for a personal loan? If you have multiple personal loans or are carrying high-interest credit card balances, consider consolidating those debts with a single personal loan. Debt consolidation can streamline your monthly payments, and it could also reduce your interest rates — especially if you have credit card debt. Borrowers often use personal loans to consolidate debt, but as with refinancing options, you'll want to make sure your new loan doesn't have an origination fee or other fees that would erode any potential savings. Ask your lender before moving forward. Read more: How to consolidate credit card debt with a personal loan As a general guideline, paying off your personal loan early will save money because, even though the principal or the original loan amount stays the same, you'll pay less interest. However, you'll want to factor in considerations like prepayment fees and other types of high-interest debt you currently have to decide if paying off your personal loan early is the right financial decision for you. To lower your monthly payment, you could secure a lower interest rate by refinancing the debt or extending your repayment period by consolidating into a new loan. However, if refinancing isn't an option and you're struggling to make payments, contact your lender and see if they can adjust your personal loan terms or temporarily defer your payments. Most personal loans are unsecured, which means you probably didn't have to put up collateral to get it. So while you won't lose any assets if you stop making monthly payments, the entire balance of the loan, including late fees, can go into default and drastically hurt your credit score. If you do have a secured personal loan, the lender can seize your assets if you fail to make loan payments. Read more: What happens if you default on a personal loan? Paying off debt affects financial metrics like your credit utilization, debt-to-income ratio, and credit mix, all of which determine your credit score. While early loan repayment is ultimately a big positive, you might see a temporary dip in your credit score. But don't worry — it typically rebounds within a few months.
Yahoo
02-06-2025
- Business
- Yahoo
PrimeWay Credit Union Launches New Debt Consolidation Program to Help Members Pay Off Debt Faster
PrimeWay Credit Union announces new debt consolidation loan program designed to help members combine multiple bills into one monthly payment with competitive rates starting at 8.99%. HOUSTON, TX / / June 2, 2025 / PrimeWay Federal Credit Union has launched a new debt consolidation program to help members combine all their debts into one simple monthly payment. Many people struggle with multiple debts and numerous bills each month. A study shows that most Americans have five or more credit cards and loans, making it challenging to keep up with payments and reduce overall debt. PrimeWay's new Debt Consolidation program allows members to consolidate various debts - including credit card debt, store card debt, and other loans - into one loan. This enables members to make only one payment each month. The rate starts at 8.99% for the first six months. After that, rates can be as low as 10.50% for up to 2 years, depending on credit score. "We saw that our members were drowning in debt and spending too much money on high interest," said Michelle Oshinski, from PrimeWay Credit Union. "Our new Debt Consolidation program helps fix this problem. It gives members one simple payment and could help them save money on interest and get out of debt much faster." PrimeWay educates members about financial literacy through their educational blog. Their website features articles about debt consolidation, saving money, and debt repayment strategies. Members can visit the PrimeWay blog to find tips and guides that explain how debt consolidation may help reduce interest payments and accelerate debt payoff. Members who participate in this Debt Consolidation program may receive several benefits. Managing finances becomes easier with just one debt payment. Members no longer need to track multiple payment due dates across various debts. They may pay less interest than they would on high-rate credit card debt. Additionally, members will have a clear timeline for when their debt will be completely paid off, helping them achieve improved financial stability. PrimeWay Federal Credit Union has served the greater Houston community since 1937, offering a range of financial products and services designed to meet the evolving needs of its membership base. For more information about PrimeWay Credit Union and its Debt Consolidation program, please visit APR = Annual Percentage Rate. Rates may change and depend on credit score. All loans must be approved. Media Contact Organization: PrimeWay Federal Credit UnionContact Person Name: Keith HuckabayWebsite: khuckabay@ 12811 Northwest Fwy, Houston, TX 77040City: HoustonState: TexasCountry: United States SOURCE: PrimeWay Federal Credit Union View the original press release on ACCESS Newswire Sign in to access your portfolio
