Having multiple debts can add stress to your life, from juggling numerous monthly payments to keeping up to date on your debts. On top of the stress, having many different loans with different interest rates can make it more difficult to pay off your debts. Debt consolidation is a great option if you want to have one payment and possibly lower your interest rates across all of your loans.
What is Debt Consolidation?
Debt consolidation is when you roll all of your debts into one debt. Instead of having to make multiple monthly payments with different institutions, you can make one monthly payment. Debt consolidation is usually something people consider when they have higher interest rate debts, like credit card debt which can be anywhere from 20–30% interest. If you can consolidate your high-interest-rate debts into one debt with a lower interest rate, you will end up paying less in interest, which can help you pay off your debts faster and more manageable way.
If you have lower interest rate debts with multiple institutions, you also may want to consider debt consolidation if you want one rate with one monthly payment. You may be able to get a slightly lower interest rate, but that will depend on who you consolidate with and what your credit history is.
How to consolidate debt
There are four ways that a person can consolidate their debt. Each has its own positives and negatives, so do your research to ensure you choose the right option.
0% interest balance-transfer credit card
Credit card companies offer debt consolidation by transferring your balance to that new card. In addition, there is usually a 0% interest offer to consolidate your debts to this card. One consideration for this option is you will need a 690 credit score or higher.
Home Equity Loan
It is possible to consolidate your loans with a home equity loan. The interest rates you get could be significantly lower for a debt consolidation plan, but there is more risk to this as it involves your home. There is a risk that if you cannot pay, then you may have to foreclose on your home.
401(k) loan
Using your 401(k) to consolidate your debt is another option similar to a home equity loan. The interest rates may be lower, but the risk is higher. This can impact your retirement plans and reduce how much money you have saved for retirement.
Fixed Rate Consolidation Loan
A common option for debt consolidation is to take out a consolidation loan which will give you the total amount you owe for all your debts as one loan. Use this money from the loan to pay off all your debts. You will then have one loan at a fixed rate to pay off instead of multiple debts at different rates. The higher your credit score, the lower the fixed rate can be.
Why use Community Resource Federal Credit Union to consolidate your debts?
At Community Resource Federal Credit Union, you can consolidate your debts with a fixed-rate personal loan. We offer competitive rates with terms of up to 72 months.
No Hidden Fees
There are no hidden fees with a personal loan for consolidating your debt. Any fees are told upfront. We have no early payoff fees, so if you want to pay off your loan early, you can with no penalty. We have no origination fee, so if you want to consolidate your loan, you will not have to pay anything for this. Other banks can charge you an origination fee to open a loan.
Keep your banking needs in one place
If you are already using Community Resource Federal Credit Union for your personal or business banking, then choosing us to consolidate your loans can be a great option. It helps you keep all your banking needs in one place, which can simplify your banking needs.
Low Rates and Longer Terms
Personal Loan rates at Community Resource Federal Credit Union start as low as 8.24% APR. We offer longer terms of up to 72 months as well. Your rate and term will depend on your credit score upon the subject of approval. These rates and terms can be a great option if you are able to pay off your loans within 72 months and have debt with higher interest rates.
How to get started
If you are looking to consolidate your loans, you can apply online today or contact a loan offer at (518) 783-2111.
Sara DeSantis
Community Resource FCU