Aside from the options listed in the former slide, there are even more ways to manage your debt and find financial stability and relief. Additional ways to create financial relief and manage debt are available.
For some people, you might become uncomfortable giving even the best debt management plan companies access to your sensitive and personal information, i.e. your financial data. What’s more, some financial obligations are not always possible to include in the debt consolidation plans or the debt relief counseling programs these companies might put together for you.
For example, tax debt is a serious matter, but the Internal Revenue Service, or IRS, will often set up its own payment plans for those who owe them money. So, paying back your tax debt would be separate from your personal debt.
There is good news, however, for those who might have student debt. Oftentimes, student loans are sometimes deferred or entirely forgiven.
It is common for people with good credit to still back themselves into financial corners. Taking out a personal loan for a low interest rate based on your high credit (FICO) score might be a perfect option for paying off your debts and setting up one low payment. It might seem illogical to take out more debt to get out of debt.
Personal loan interest rates for borrowers with good credit are often friendly, affordable, and significantly lower than the APRs on credit cards, however. For example, average APRs on credit cards range between twelve and forty percent.
APRs on personal loans average around ten percent. Borrowers with excellent credit ratings might see personal loan APRs around five percent or lower (if borrowing from a credit union).
Credit card consolidation and balance transfers are also great ways to lower you debt. Balance transfer offers often include zero percent APRs for the first six to eighteen months you own the account. This process is a great short-term method of reducing monthly payments and an excellent option to eliminate some debts entirely if balances are paid in full before interest accrues.
Consolidating various high-interest credit cards is another effective way to reduce debt. Credit card consolidation is best for consumers with good to excellent credit because lower APRs are offered to borrowers with higher FICO scores.
Bankruptcy is the last choice most people turn to for debt relief. Bankruptcy eliminates most to all your debt but also impacts your credit rating for seven to ten years once completed.