Anyone who has multiple high-rate loans and credit cards knows just how difficult (and expensive) it can be to recover. Take control of your high-interest loans and credit cards with MTFCU!
Studies show that 70% of Americans are stressed over money.**
Debt remains an issue for most Americans, regardless of income. Those earning between $50,000 and $100,000 report having.
- Credit card debt: 52%
- Auto loan: 42%
- Mortgage: 39%
- Medical debt: 23%
- Personal loans: 22%
- Student loans: 22%
What is a debt consolidation loan?
Consolidating debt means taking out a new loan to pay off multiple existing debts. Ideally, debt consolidation allows a borrower to obtain better terms and/or rates. Once the debt is consolidated, the borrower makes one monthly payment.
Is consolidating debt a good idea for you?
Debt consolidation can be an excellent financial tool to reduce debt and/or payments. However, it isn’t right for everyone. Compare the advantages and disadvantages to see if debt consolidation is right for you.
- May reduce your interest rate
- Potentially lower monthly payments
- Fewer payments to keep track of each month
- Could improve credit score over time
- Promotional incentives are sometimes available
- Some consolidated loan types, such as home loans, may lose tax advantages
- A lower interest rate may not be available
- It could result in a longer payoff schedule or potentially higher monthly payments
SEE HOW MUCH YOU CAN SAVE WITH OUR DEBT SOLUTIONS
RATES START AS LOW AS 10% APR*
4 Tips to Consolidate Debt
Taking on a debt consolidation loan can help you turn an unmanageable stack of bills into one simple monthly payment. And if you qualify for a loan with a low enough interest rate, you can even save money. But the benefits of a debt consolidation loan can quickly turn into financial pitfalls and land you back in the red if you aren’t careful.
Here are 4 tips to manage your new debt consolidation loan and make sure your debt doesn’t return!
1. Before you apply for a debt consolidation loan, add up the balances that you want to consolidate so you know exactly how much you need. Run some loan payment calculations to make sure you can the payment (minus the debts you are paying off) so that you don't get over-extended again.
A good lender will work with you to structure your loan so that you get the right rate, term, and monthly payment that works for you. Look for a loan that does not have a penalty for paying your loan off early.
2. Simplify the process by working with a lender who will pay your creditors directly, so you don't have to worry about getting the "cash" and making the payments. Plus, it removed the temptation to spend the money on something else vs. paying off your debts.
3. Set up automatic payments for your new loan, so you don't miss a payment, incur late fees, or negatively impact your credit score. The payment can be set up to automatically come out of a designated account, so you don't have to do a thing! You may even get a small rate discount for automatic payments.
4. The last tip - but hardest - is to stop adding to your debt, while you are paying off your debt consolidation loan. Closing credit cards can actually hurt your credit score since it lowers your total available credit so having an open card with no balance is tempting. Do not use the card unless you can pay the balance off IN FULL each month!
A debt consolidation loan can be an effective way to save money, reduce stress, and pay down multiple debts. Just make sure you are disciplined about managing your credit and making your payments on time.
*APR is Annual Percentage Rate. Rate based on credit history and score. Certain credit criteria apply, and rates are subject to change. A $10,000 loan at 10.0% APR for 36 months would have 36 monthly payments of $322.67. 1Current MTFCU loans/credit cards are NOT eligible for this debt consolidation offer. Up to $350 loan payment equal to one percent (1%) of the loan balance financed at MTFCU. 1% of a $10,000 loan amount is $100. Payment will be applied to the members’ new loan. You must be a member in good standing to qualify. Bonus is considered interest and may be reported to IRS Form 1099-INT. Please consult your tax advisor on any legal, tax, or financial issues related to your bonus or personal matters. Offer subject to change at any time and ends March 31, 2024.