As much as you’d like to save on interest charges by paying your credit card balance in full each month, there’s little wiggle room in your budget. You’ve settled on simply making all your minimum required payments on time, which is good for your credit score, but not so much for your ability to save money. If most of your payment is going toward interest charges instead of the outstanding balance, the longer it will take to pay off debt.
Fortunately, you have options to reduce your interest charges. More of each payment can go toward decreasing your account balance and potentially saving you $1,000s in the process. Use the Debt Relief Calculator to estimate the potential savings available when you reduce interest charges.
Here are several ways to reduce the total interest paid on your debts, even when you’re unable to pay your balance in full.
1. Check Your Credit Score
If your credit health has improved since you first received your credit card or loan, then you might be eligible for a lower interest rate. Consumers with higher than average credit scores often receive credit offers with competitive interest rates and favorable repayment terms. A variety of factors influence credit scores. If you have a history of making on-time payments and haven’t maxed out your available credit, you might be able to negotiate a lower interest rate. Contact your creditors and ask if an improved score can reduce your rate by several percentage points.
If you don’t know your credit score, you might be able to find it for free by reviewing your account statements from lenders, financial institutions and credit card companies. Your score may already be listed on one or more of these documents. If not, you can purchase your score from myFICO® or VantageScore®.
2. Increase Your Income
Even if you’re unable to lower your interest rate after speaking with your creditors, you can still save a substantial amount of money by making more than the minimum required payment. Extra money applied to your debt allows you to pay it off sooner and save on the interest charges. You typically won’t be charged interest on an account with a zero balance. Consider working overtime at your current job, taking a temporary part-time job, or making money from a hobby. Then, apply those funds to your debts.
3. Rethink Your Expenses
If time constraints won’t allow you to spend hours earning extra income, review your budget to see where you can trim expenses. Canceling cable sports packages, pausing delivery services, and changing your cellular data plan can free up money and allow you to double up on debt payments.
Whether you increase your income or adjust your current spending, funnel the extra cash to your debt payments to slash debt quickly.
4. Pay Off Higher Interest Debt First
If your goal is to save the most in interest charges on your path to debt reduction, then paying off the highest interest rate account first makes the most sense. Then, move to the next lowest rate credit card or loan. As you pay off each one, apply that payment to the next smallest interest rate account until you’re debt-free. This debt elimination strategy works since it naturally eliminates the debt costing you the most money first.
5. Consolidate Your Debts
Say goodbye to high-interest rates and save money in the process when you consolidate your debts into a new low-interest rate consolidation loan. Prince George’s Community Credit Union’s Debt Relief Challenge encourages qualified applicants to refinance their high-interest rate debt and earn 0.25% of the refinanced loan balance, up to $500 cash back!*
Contact us, call 301.627.2666, stop by a branch or visit www.PrinceGeorgesCFCU.org/DEBTRELIEF to
discover how to improve your financial fitness by saving on interest charges when you refinance with Prince George’s Community Federal Credit Union.
*APR = Annual Percentage Rate. Rates and APRs are effective as of 1/1/2020 and are subject to change without notice. Campaign runs Jan. 1- Mar. 31, 2020. Your rate will vary depending on your credit worthiness and term of loans. This offer is available on used automobiles, boats, RVs, motorcycles, credit cards with balances, home equity loans and secured personal loans. This offer does not apply to existing Prince George’s Community Federal Credit Union loans. Loan minimum is $5,000. The maximum reward for refinanced loan is $500 per household. If loan is closed within 24 months of opening, the 0.25% cash-back award will be forfeited and added to the payoff amount. If you participate in this offer you may receive a Form 1099 MISC at the year-end for tax purposes. Eligible funds will be disbursed one month after promotional end. Prince George’s Community Federal Credit Union membership required. Certain restrictions apply. Contact us for details.
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