A recent study shows that over 44 million Americans have outstanding student loan debt, with the total national debt surpassing $1.6 trillion. Taking on student loans has become a normal part of the college experience, and this debt follows graduates late into their careers.
If you want to get out of debt now and avoid being another statistic, you can try this practical tool to help prevent you from owing even more.
Debt consolidation is an organizational tool that allows you to pay multiple debts off at once with a lower interest rate. It helps to simplify your payment plan by bundling your unsecured debts (such as student loans, medical bills, credit card bills, and personal loans) into one bill with a lower interest rate.
If you’re trying to form a solid plan to resolve your debt, you can use this method to rearrange it in a more manageable way. The most common forms of debt consolidation are balance-transfer credit cards and fixed-rate loans. Both of these options are feasible routes to take on your journey to resolve your debt!
Balance-Transfer Credit Card
Balance-transfer credit cards offer promotional interest rates for a limited amount of time. If you transfer your debt to one of these cards, you can use their promotion to your advantage.
Budget your payments so that you can pay off the majority of your debt while the card you’re using has 0% APR. Several card options are available that give you the ability to pay off your balance with no transfer fee, a $0 annual fee, and 0% APR for a limited time.
Fixed-rate loans don’t change their interest rate over time and are paid off in recurring installments. The interest rates can be a bit higher than variable loans, but you’ll have more time to pay them.
It’s most common to use this method of loan payment for mortgages so that they don’t accumulate excessive interest over a long period of time. However, you can also refinance your remaining balance of student loans to fit this fixed-rate format if you need a longer repayment time.