Feeling stressed about debt? You’re not alone.
In fact, Ohio came in at No. 8 in a recent study by WalletHub that ranked all 50 states based on credit card debt.
We’re glad Ohio isn’t in the top five, but we’d still like to help our community members in Alliance, Akron, Canton, Hartville, Cleveland (and the surrounding areas) reduce their debt to put themselves in a better financial position.
We know many people are looking for the best loans for paying off debt. We’re happy to offer affordable personal loan options. But how does consolidating debt work, and why is rolling it into one loan a good idea? Let’s break it down.
What is Debt Consolidation?
It might sound complicated, but a debt consolidation loan will make your life so much easier. When you consolidate debt, you’re taking out a new loan to pay off one (or several) higher-rate creditors. Think: standard credit cards, as well as “buy now, pay later” financial service companies like Affirm and Afterpay.
With all these new credit payment options, it’s easy to get in over your head by racking up several lines of credit. And even if you’re not paying a high interest rate on all of them, it can be hard to keep track of all your payments. That’s why debt consolidation is a great option for debt management.
What Are the Best Loans for Paying off Debt?
Personal loans are at the top of the list for debt consolidation. Why? The interest rate is often lower than most credit cards – meaning you’ll have just one monthly payment that’s likely lower than what you’re paying now. You can pocket that extra savings to create more room in your budget or apply it to your loan balance to pay if off faster.
Plus, you’ll benefit from flexible personal loan terms. At Buckeye State Credit Union, we offer a variety of term lengths – giving you the option to pay off your debt on a shorter timeline, or you can choose a lower monthly payment with a longer term.
Having a set timeline for debt elimination can bring its own peace of mind. Many often feel like they’ll never get out from under the cycle of credit card debt, so when they have a clear end date for paying it off with a personal loan, it’s motivating!
To summarize, you’ll benefit from a personal loan for debt consolidation because:
- Personal loans typically have a low interest rate.
- You can consolidate all your high-interest debt into one low monthly payment.
- It’s flexible. You can select from a variety of term lengths.
- You have a clear end date for paying off your debt, giving you peace of mind.
What Can You Expect From the Loan Process?
Using a personal loan for debt consolidation is a lot like getting any other type of loan. At Buckeye State Credit Union, we make it easy to apply and pay off creditors from other financial institutions. Here’s what you can expect:
- Start the application process online by visiting our Personal Loans page.
- Click Apply Now, select “Anything Loan” and fill out your information.
- Once you submit this application, one of our loan officers will contact you to gather more information.
- If you’re approved, we’ll pay off your outside creditors, and you’ll have one loan with us!
What Are Some Tips for Debt Management Moving Forward?
Whether you decide to get a debt consolidation personal loan or not, there are steps you should take to prevent yourself from accumulating more debt – which can affect your ability to buy a home or vehicle and make it difficult to save money.
We want you to feel financially stable and confident. Use these tips to improve your financial outlook. Smart money management is a skill, and we’re confident you can master it!
- Review your income, expenses and savings.
Take a close look at the money you have coming in and the money you’re spending on bills, groceries, dining out, clothing, subscriptions, home goods, etc. Calculate how much you’re spending on each category and how much you’re overspending. Take a look at how much money (if any) you’re putting away in savings. Building your savings can help prevent you from using credit if you’re running low on funds. - Ask yourself why you’re overspending. Living beyond your means can stem from social pressure, an emotional impulse or simply out of habit. Understanding the root cause can help you change your behavior.
- Create a budget.
Once you know exactly how much you have coming in each month, subtract monthly bills that have a fixed cost (rent/mortgage, car payment, loans, etc). Your other expenses are an opportunity to cut costs (groceries, utility bills, subscriptions, fun money, etc.) Determine how much you want to spend moving forward and write it all down in a paper or digital spreadsheet. - Follow your plan and assess your progress.
After a month or two has passed, recalculate your monthly spending to ensure you’re following your new budget. Any extra money you have from the cuts you made should go toward savings or paying down existing debt. - If you take out a Personal Loan, avoid adding credit card debt.
Be careful about only using your credit cards as a last resort for emergency situations moving forward. If you consolidate debt with a personal loan and then rack up more credit card debt, you’ll put yourself in an even tougher debt management situation.
What Are Some Other Uses for Personal Loans?
The great thing about personal loans is that you can use one for almost anything, and replacing your credit card debt with a Personal Loan can lower your credit utilization scores over time, which could give your credit score a boost.
Debt consolidation is one of the most popular reasons to take out a personal loan, but you can also use it to fund:
- Home improvement projects
- Medical expenses
- Auto repairs
- Major purchases
- Wedding expenses
- Education costs
- Vacations
- And more!
Like we mentioned before, personal loans generally have fixed interest rates that are lower than most credit cards, so you’ll pay less over the life of the loan.
Have questions?
Don’t hesitate to reach out to us! We can walk you through your options for debt consolidation and personal loans.
- Find a branch near you and talk to us in person.
- Call us: (330) 253-9197
- Or send us an email: support@buckeyecu.org
