![]() Remember, though, that your home is the collateral for this loan. This could be a good financial move to help save money on interest and get out of debt faster. You may be able to get a cash-out refinance and pay off your credit card debt. Let’s say, for example, that you have $20,000 in credit card debt with an APR of 20%. Think of a cash-out refinance as a debt consolidation loan that you give yourself. This lets you refinance your mortgage in a way that unlocks some cash from your home equity, allowing you to put that money toward other goals-like paying off high-interest debt. If you own your home, have a sufficient amount of equity in your home and qualify to refinance your mortgage at a lower interest rate, you may want to consider a cash-out refinance. Pay Off Debt With a Cash-out Mortgage Refinance Both with a balance transfer card and a personal loan, the challenge is not to incur additional debt while you’re paying off the card or consolidation loan. ![]() Similar to a balance transfer card, the best debt consolidation loans offer a lower APR on your debt, helping you save money on interest and pay off debt faster. To get a consolidation loan, you’ll generally need fair credit or better. This is called a debt consolidation loan. You might be able to get a better deal on paying off your credit card debt or other debts by combining those debts into one new loan. ![]() Be aware of any balance transfer fees, and make sure you pay off your balance before the end of the introductory rate period. Cutting your APR can help you pay off debt faster. This lets you open a new credit card account at a lower introductory rate of interest.Ī balance transfer credit card does not eliminate your debt, but it does allow you to pay off your debt at a much lower, or 0%, interest rate for a set period. Some balance transfer credit cards offer 0% APR on the balance transfer amount for an introductory period of a certain number of months. If you have a good credit score and carry one or more credit card balances with high APRs, you may want to consider applying for a balance transfer credit card. Whichever way works for you, the important thing is the result: becoming debt free. While the debt avalanche strategy can help you save money on interest, you may prefer the feeling of accomplishment you get from the debt snowball method when you pay off smaller debts first. You may pay less interest over time by knocking out the higher interest rate debts first. Then, you start paying off the next highest-interest debt. With this method, you start by paying off the highest-interest debt first while making minimum payments on all other debts. This will give you a sense of momentum that builds over time, like a “snowball” rolling downhill. Then, you move on to the next-smallest debt. With this method, you start by paying off your smallest debt first while still making the minimum payments on your other debts. Two strategies for paying off debt are the debt snowball and the debt avalanche methods. Use a debt management app, budgeting app or your bank or credit union’s built-in online tools to track your progress with paying off debt.Use a calendar or automated reminders to keep track of payment due dates, especially if you’re paying off multiple credit cards or debts at once.Use automatic transfers from your bank account to your credit card.If you want to be free from debt, try using these tools and techniques to put your debt payments on auto-pilot: For example, if you can find $200 of spending that you can cut from your typical monthly budget, after 12 months you would have $2,400 to put toward your debts. Use these apps to look for opportunities to cut spending and dedicate more money to eliminating debt.Įven small cuts to spending can add up fast. Some of the best budgeting apps are free or charge a low monthly fee after a free trial period. Consider using a budget tracking app to understand where every dollar goes. Start by taking a close look at your monthly spending.
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