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A new report from the New York Fed has found that 9.6% of Americans fear missing debt payments in the next few months. Here’s how to get your debt under control. (iStock)
Consumer expectations for long-term and short-term inflation are at a higher rate than ever, according to the Federal Reserve Bank of New York’s most recent survey of consumer expectations (SCE).
Perhaps equally concerning, however, is the fact that 9.6% are concerned about missing a minimum debt payment over the next three months. While this is a slight drop from the 12-month moving average of 10.1%, it still shows that millions of Americans feel ill-equipped to manage their massive debt balances.
But with historically low interest rates for a number of financial products, it may be possible to reduce the minimum payment on your loans in order to keep creditors and debt collectors at bay.
Keep reading to find out how to refinance your debt, including credit cards, mortgages, and student loans. If you decide refinancing is right for you, look for the lowest possible interest rate for your situation on a number of financial products on Credible, without hurting your credit score.
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Consolidate credit card debt with a personal loan
High interest revolving credit card debt can throw your monthly budget off balance. And if you make the minimum payment on your credit cards, it can seem like impossible to keep your debt from spiraling out of control. Fortunately, there are a few popular ways to pay off credit card debt, including using a personal loan.
Personal loans, also known as debt consolidation loans, are lump sum loans that you pay off in fixed monthly installments over a set period of months or years. Unlike credit cards, the interest rates for personal loans are fixed. and your monthly payment will always be the same – and you’ll know exactly when your debt is fully paid off.
Personal loans also offer lower interest rates than credit cards. The average rate on a two-year personal loan was 9.58% in the second quarter of 2021, according to the Federal Reserve, compared to 16.30% for credit card accounts rated at interest.
Lower interest rates can result in lower monthly payments and significant savings on interest charges. Borrowers who have consolidated their credit card debt into a personal loan using Credible can save an average of $ 66 on their monthly payment and $ 2,372 on interest over time.
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Figure out your new monthly debt payment using Credible’s personal loan calculator to see if credit card consolidation is right for you.
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Lock in a record mortgage rate with refinancing
Millions of homeowners have yet to take advantage of record mortgage rates to refinance, but there is still plenty of time to do so. Mortgage rates are still close to their historic lows, regularly fluctuating below 3% according to to Freddie Mac. And with the end of the adverse refinancing fees of the pandemic era, mortgage refinancing is now cheaper than ever.
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Refinancing to a lower mortgage rate can help you save a lot of money on interest, pay off your mortgage faster, and even lower your monthly payments.
In one example, homeowners have the potential to save over $ 300 on their monthly mortgage payments by refinancing a new 30-year mortgage. Use a mortgage payment calculator to see how much you can save by refinancing your home loan.
One factor to consider is mortgage refinancing closing costs. These will cost around 1.5% of the mortgage balance and are usually built into the total loan amount.
It is important to shop around with several mortgage lenders to get the lowest possible interest rate for your situation. You can compare mortgage refinance rates in minutes on Credible.
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Refinance your student loans to reduce your monthly payments
Refinancing a student loan is similar to mortgage refinancing in that you take out a new loan with better terms to replace your current loan. And like mortgage rates, private student loan rates are still near all-time lows, credible data shows.
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Creditworthy borrowers who refinanced a longer term student loan on Credible have reduced their monthly payments by over $ 250, all without increasing the overall cost of the loan. Use Credible’s Student Loan Refinance Calculator to see how much you can save on your monthly payment.
Federal student loan borrowers should be aware that refinancing a federal student loan to a private loan will make them ineligible for federal protections such as income-tested repayment plans, abstention and student loan exemption programs.
Not sure if refinancing your loans is a good idea? Connect with an experienced loan officer at Credible who can walk you through the process and help you determine if refinancing is right for you.
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Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.
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