There are multiple systems for tackling high interest debt and getting back on sound financial footing. It seems like everyone has an impressive-sounding name for THE plan to get you out of debt.
Some swear by the snowball method because this method lets you see results faster in getting balances to zero and build upon those early wins. Others say the program that makes the most financial sense is the avalanche method because the higher your interest rate, the more of your monthly payment is going to paying interest instead of paying off your balance.
One system is not necessarily inherently better than another (sorry, guys!). In many ways they are asking you to tackle the same debt anyway: paying off the higher interest debt first. It really depends on if you’re able to stick with the program without getting frustrated or losing willpower. These methods take a while to achieve your goal and it may be a long time before you feel any relief in your monthly budget.
There is a third option if you own your own home, and it will likely save you thousands of dollars over the years in paid interest. It helps you avoid those extremely high interest rates entirely. Interested?
Home equity loans use the balance of your property’s value less the amount mortgaged against it to provide one bill with significantly lower rates than credit cards or unsecured personal loans. And because you can extend the repayment over a longer period of time, your overall monthly payment will likely also go down drastically, giving your monthly budget instant relief!
Plus, if you’re looking to finance home improvements, a vacation or help a child pay for college tuition, you can achieve your personal quality-of-life goals while still achieving your financial goal of getting out of debt.
Other perks include the fast turnaround time for finalization, the option to take out a fixed lower interest loan or open a home equity line of credit where you only draw down the cash you need now then drawing more without having to reapply for a new loan.
Curious if this could be a good option for you? Take the Standard Bank One-Minute Home Equity Loan Test to find out. If your score looks promising, call your local office and ask for their loan specialist who can help you select the right option for your situation. Or, you can also apply directly through the secure online application portal!
Below is an example of the impact of $20,000 in credit card debt when you consolidate with a home equity loan:
*Credit card national average for variable rate credit cards as of week 10/16/2019 according to bankrate.com is 17.58%. Minimum repayment assumes $300 with no fees.
**APR stands for Annual Percentage Rate and is current as of 10/03/2019 and subject to change without notice. Home equity loan APR shown is applicable for $10,000 at 180 months from the date of closing for qualified applicants with a debt ratio of 40% or less. This loan must be a second lien position on a 1-4 family owner-occupied dwelling with a loan-to-value (LTV) of 89.9% or less. The monthly payment for loan amounts $10,000 to $484,350 per $1,000 borrowed on a 120 month loan is $10.12. Payment example does not include escrow for property related taxes and insurance that must be paid separately. Closing costs may range from $298 to $850. An appraisal will be required on loan amounts in excess of $250,000. Title insurance is required on loan amounts in excess of $400,000. Applicable recording stamps for the State of Maryland must be paid by the borrower. Existing customers must increase their loan by $10,000 to qualify. Standard underwriting guidelines apply. Consult your tax advisor about the deductibility of interest. Offer subject to change without notice. Standard Bank NMLS #441399.