It’s one thing to clean out all of your closets, but the best type of “house cleaning” is to get rid of debt. One survey conducted in 2016, revealed that the average American household carries over $15,000 in credit card debt. They also have on average, $27,000 in auto loans, $46,500 in student loans, and nearly $174,000 in mortgages. According to the Federal Reserve Bank of New York, American household debt had risen to nearly $13 trillion. If you feel as though you are drowning in debt, it’s time to do something about it.
St Anne Credit Union New Bedford can provide you with information on tools that can help you take control. Check on the status of your credit union auto loan or increase monthly payments to pay it off faster. Use your credit union checking account to monitor your spending and pay down debt. Ask about loan interest rates to see if you qualify for refinancing to help you save throughout the life of your home or auto loans. There are things you can do, but you need to be proactive and take the first step by speaking with a representative.
Step One: Set Debt Goals
Go over your accounts to determine how much debt that you have as an individual and as a household. Continuing to pay the minimum amount on your credit union auto loan or home loan won’t help to pay off your debt any faster. Contact your local credit union in New Bedford and tell them about your plan to reduce debt. You may be eligible for lower loan interest rates or might be able to get information about how to pay your loan off faster. Not all loans can be paid early without being charged early payoff penalties and fees, so it is important to do some research ahead of time.
Go over all of your credit cards and personal loans as well. The best way to tackle debt is to list all of your accounts according to the highest credit or loan interest rates. For example, a credit card with a 24.99 percent interest rate should be paid off before a 19.99 percent interest rate. This is true even if a bigger balance is owed on the smaller interest rate card. In some cases, you can move over a balance from a high-interest rate card to a lower interest rate account. Make sure to research any fees or costs associated with doing this.
Step Two: Establish a Plan
Create a monthly budget. Include every recurring bill, such as utilities, mortgage or rent, insurance, car payment, fuel, food, personal items, minimum credit card payments, and regular payments for other loans or debts. It is essential that you have a base budget that accounts for all of your regular and recurring purchases. Go over your credit union checking account to see your spending habits. You should be able to spot areas where you can make smart changes, such as reducing the number of times you eat out each month.
Once you identify your basic monthly budget and income, it becomes easy to see what you can afford. Start to pay down accounts with high credit and loan interest rates to reduce your debt. Once you have paid a credit card or loan down completely, don’t just cancel the card. Reducing debt is important, but you want to mind your credit score as well. Put the card away – take it out of your wallet – so you won’t be tempted to use it again. Once you have everything paid down or paid off, you can decide which cards you want to keep and how you want to use them.
Step Three: Start Making Payments
Some people like to pay off credit cards, home loans, and credit union auto loan accounts by doubling up payments. You can also take a look at the amount that goes to principal and interest, and pay additional amounts accordingly. For example, a $500 credit card with a $30 minimum monthly payment and 24.99 percent interest rate. It will take one year and nine months to pay off completely if only the minimum payment is made. However, for that same card, increasing the monthly payment to $60 will take just ten months to pay it off completely.
Use credit card calculators, speak with representatives at your local credit union in New Bedford. Discuss your loan interest rates to see if there are any options for reducing the amount that you have to pay. You will never know unless you ask, so it pays to take the time to go into the office and speak with someone about your plan to reduce debt. Refinancing, consolidation, and early pay-off penalties are just some of the things that you will need to consider and discuss.
Visit St Anne Credit Union
Are you a member of your local credit union in New Bedford? While credit unions have all of the options and services associated with traditional banking, there are clear benefits. At St Anne Credit Union you are not simply an account number, you are a member. Credit unions are not for profit organizations, which means that we work for our members, not a group of shareholders. Any profits that are made go back to our members in the way of reduced fees, lower interest rates on loans, and higher interest rates for savings. Give us a call at 508-993-0011 to speak with a representative. You can also visit our location on Union Street in New Bedford, Massachusetts to learn more about how to become a member.