Credit card debt is widespread among the average American household and finding ways to consolidate it usually means tapping into the equity in your home or seeking a personal loan to service the credit card payments.
Using the equity in your home to apply for an equity home loan is an excellent method for getting your finances in order – it has become a popular form of liquidity to finance and consolidate existing credit card debt. Likewise, depending on your circumstances, a personal loan may be an appealing option to manage your debt. However, for personal loans without collateral, financial institutions and brokers are going to want a higher return for the added risk.
For some, consolidating debt means borrowing from 401k accounts. While it may provide immediate relief, it is to the detriment of your future financial security. Short-term debt solutions have their benefits and drawbacks so consider it only if the timing is right and you are confident that you can repay the loan.
Whether you opt for a personal loan or a home equity loan, keep in mind that the higher the interest rates, the higher the repayment which means less disposable income for savings and recreation. We recommend paying down your credit card debts first as they carry the highest interest rates of any form of credit. With a personal loan, your rate of interest will be fixed for the duration of the loan and you will be required to make monthly installments to service the loan which will be at a rate much lower than any credit card debt you are carrying.
Whatever you choose, remember that none of these options is without risk. Visit your neighborhood North Country Savings Bank where our experienced professionals and knowledgeable staff can help you formulate an effective debt management strategy. We'll guide you through the process, explain the fine print and help you weigh the advantages against the disadvantages so you can make the best decision.