Managing Your Debt Wisely

Debt isn't forever, but it may feel like it sometimes. It's helpful to regularly review your debt to see if there are better ways to pay it off. These ideas can get you started.

 

Lowering your monthly payment may free up funds you can use to pay down that debt faster or to help you reach other financial goals. If your credit score has improved or if current interest rates are lower than what you're paying, refinancing may lower your monthly payment. Extending the term of your loan can also lower payments, though increasing your repayment period can raise the overall amount that you repay and your total cost of borrowing. Here are more ideas that can help you lower your monthly payments.

 

If you're finding it hard to manage payments on multiple credit cards and other high-interest debt, it may be worth exploring debt consolidation1. The idea is to roll your various debts together into one loan with a single monthly payment. This can simplify your financial life and reduce stress, while possibly reducing your monthly payment. Start with these three easy steps to see if debt consolidation may be right for you.

 

Before you make a decision about refinancing or consolidating debt, it’s a good idea to consider all the costs involved, not just the monthly payment. Key variables include the length, terms, and fees. The annual percentage rate (APR) captures all these fees and expenses, and can help you understand what the loan is really costing you. For more insight on the total cost of borrowing, see this helpful article.

 

1 Before you apply, we encourage you to carefully consider whether consolidating your existing debt is the right choice for you. Consolidating multiple debts means you will have a single payment monthly, but it may not reduce or pay your debt off sooner. The payment reduction may come from a lower interest rate, a longer loan term, or a combination of both. By extending the loan term, you may pay more in interest over the life of the loan. By understanding how consolidating your debt benefits you, you will be in a better position to decide if it is the right option for you.