There are different ways to get rid of student loans and credit card debt, depending on the type of loans held, your outstanding balances, interest rates, and other factors.
How to Repay Card Balances Faster
While paying the balance in full each and every month sounds like the best thing to do, some people find it difficult to deal with high-interest debt. If you use two or more cards, i.e. student, department store, and so on, one option is to consolidate all balances and benefit from a promotional very low or zero interest rate. The main benefit to debt consolidation is that you will be able to repay your balances faster and at an affordable rate. Some issuers also offer long promotional periods of up to 18 months to attract new customers. If you have high interest student credit cards, this is one option to explore while a second option is to shop around for a consolidation loan. It is a good idea to check with the Better Business Bureau to ensure that you are dealing with a trustworthy and reputable lender. The average term is 60 months or 5 years, and the rate is usually considerably lower than credit cards (i.e. 6 percent vs. 18 – 10 percent or higher). This is a low-cost solution to be able to meet your monthly payments. There are many traditional lenders and online services to contact and apply for a consolidation loan. Some lenders even offer handy online tools to calculate your rate based on your credit score, amount required, and loan purpose, i.e. business, medical, home improvement, land purchase, debt consolidation, etc.
If you have other high-interest balances other than card balances, you can also apply for a consolidation loan. There are plenty of benefits such as affordable payments, one due date, one balance, and easier budgeting and planning.
Other Options
I have a problem with my credit card. I was offered a credit card and I accepted. I was told that I would receive an additional bonus of $500 if I paid off my credit card in full within the first 2 years. I did, and I received the $500 bonus. The problem is, when I look at my statement, I am paying the $500 and then I have a balance of $7,000. I am still paying the $500 per month, plus the $500 on my balance. I think the $500 should be applied towards the balance. Am I correct in my thinking?
This depends on whether you have a government-sponsored student loan or a loan from a private issuer. In the first case, there are options such as repayment assistance or forgiveness whereby borrowers only pay a portion of the outstanding balance or are offered debt relief. The options available depend on your province or territory of residence and whether you have a provincial or national student loan. There are several solutions to deal with debt that is unaffordable, including forgiveness, principal deferment, extended amortization, interest relief, and others. Keep in mind that these options are usually not available to borrowers who are delinquent or hold delinquent loans. It is important to seek timely advice before it is too late. There are other financial solutions if you are knee-deep in debt, one being credit counseling. Counseling helps heavily indebted borrowers to gain financial insight and acquire sound money management habits to repay student and other loans. This is a type of debt management whereby counseling agencies contact and negotiate with financial institutions so that borrowers benefit from better terms and a reduced monthly payment. When choosing a counseling agency, there are some questions to ask – whether they are licensed to offer financial services, for example. Inquire whether you will get reassurance that your personal and financial details will be kept confidential, including your employment details, phone number, current address, and so on. Obviously, it is important to ask about their fees if you are dealing with a for-profit agency. Finally, it pays to ask how a debt management plan works. Most credit counseling agencies will use the deposit you make on a monthly basis to repay medical bills, student loans, credit cards, and other balances, based on a payment schedule which has been approved by your financial institution.