Pay off your debt with these 3 strategies
Credit usage jumped 8.8% in the second quarter of 2021, driven by an increase in revolving credits such as credit cards, according to the Federal Reserve’s latest report. Consumer credit report.
Revolving credit has grown at an annual rate of 10.7%, and non-revolving credit – such as mortgages, student loans, or personal loans – has grown at an annual rate of 7.2%. In June alone, revolving credit grew 22% per year.
If you look at the dollar amounts, total debt fell from $ 4.24 trillion in May to $ 4.27 trillion in June.
There are several ways to help you quickly pay off debts you may owe due to increased use of credit, such as using a low-interest personal loan. Read on to find out more, and use an online marketplace like Credible to make sure you get the best rate and the best lender for your needs.
Inflation on the rise
The increase in credit card debt isn’t too surprising, given the latest increases in inflation. Consumer prices rose 5.4% per year in July, according to the last report of the Bureau of Labor Statistics. Used car prices rose only 0.2% in the month, significantly lower than the 10.5% peak seen in June. The food index rose 0.7%, the energy index rose 1.6% and gasoline prices jumped 2.4%.
The 5.4% increase is significantly higher than the Federal Reserve’s target inflation rate of 2% per annum. The Fed has said it does not plan to raise interest rates at this time because it views high inflation rates as transient, but experts are starting to predict that the Fed could end up raising rates significantly. interest as the economy strengthens.
“Once the Fed determines that employment is at a good level, it will focus on inflation … if there is sustained inflation, then rates will go up – and they could go up a lot,” he said. said Melissa Cohn, William Raveis. Executive mortgage banker.
Want to save money to help pay off high interest debt? Consider taking out mortgage refinance with withdrawal when interest rates are low, and potentially lowering your minimum monthly payment. Visit Credible to Compare Mortgage Rates and get prequalified without affecting your credit score.
How to pay off a debt
As prices in several sectors continue to rise, paying down debt could become difficult. Here are some strategies to help you with your debt repayment plan:
- Take out a personal loan
- Cash-out refinancing
- Compare auto insurance costs
Take out a personal loan: Take out a debt consolidation loan today low interest rates can help you pay off high interest credit card debt. But if you choose this option, be sure to change your consumption habits; if you don’t, you run the risk of accumulating credit card debt again through monthly spending with additional personal loan debt.
If done right, a debt consolidation loan can set you up with a debt repayment plan at a lower interest rate. Visit Credible to get started and see personal loan options of several creditors at the same time.
Make a cash-out refinancing: For those with higher home equity, cash refinancing might be a viable option to consider. Currently, the average 30-year fixed rate mortgage is below the 3% mark. Homeowners can withdraw money from their home to consolidate debt and pay off credit cards with the highest interest rate, while reducing the overall interest rate on their home loan.
Some borrowers might even still save on their monthly payments after withdrawing the money from their home. The extra money can also be used for the debt management plan to help make other payments. Check out Credible to compare lenders and see if you can save on your monthly payment by lowering your interest rate.
Compare auto insurance rates: Auto costs have increased along with other consumer prices. In July, the price of a used car exceeded $ 25,000.
One way to cut down on car expenses and pay off a car loan quickly is to compare different car insurance costs. Via an online marketplace like Credible, drivers can compare multiple policies to determine which one is best for them and their financial needs. They can apply the extra money saved on their minimum payment to help pay off credit card balances.
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