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          Debt Consolidation

          Consolidating Longstanding Debts

          How Do I Consolidate Debt and Start Saving?

          The average American household has more than $130,000 in debt, and that burden can feel overwhelming.

          Credit cards are a major source of painful debt – revolving balances that average more than $15,000 per household and growing – but most of us also carry student loans, mortgages and sometimes high vehicle loan payments. Getting a handle on your finances often involves consolidating debt so that your payments are more manageable and those balances start going down.

          The good news is that you have time to work on reigning in your spending and consolidating debt.? When considering the question: “How do I consolidate debt and start saving,” reducing your monthly spending to an amount within your means is one of the most important steps toward finding the answer.

          Let’s take a look at three options for managing your debt:

          1. Credit cards
          2. Personal loans
          3. Home equity loans

          Balance Transfers to Credit Cards

          If you have only a small amount of debt, you might be able to pay it off through a balance transfer to a new credit card. Many cards today offer a 0% APR for the first year to 18 months, and sometimes you can get perks that include cash back or a $0 fee on balance transfers.

          Shifting debt to a new card only works if you are getting a better rate, stop spending on your existing card and can pay off your debt within the 0% APR term. Some cards will charge you interest on the transfer if any of that amount remains past the initial 0% APR term, which could cause a financial hit down the road.

          If you have good credit, then you could receive a stronger interest rate on personal and home equity loans, which typically makes them a better vehicle for larger debts.

          Personal Loans

          A personal loan is one of the most common tools used to consolidate personal debt.? Many companies will offer a debt consolidation loan package that helps you manage your finances with a locked-in lower interest rate, payments you can schedule, and the flexibility to select payment amounts and terms to best fit your needs.

          Personal loans typically don’t require any collateral, so your rate is largely dependent upon your personal credit history. Poor credit can push up the APR on these loans above 30% depending on the lender. If you have a less than stellar credit rating, or you want to borrow more than the typical personal loan lender does, there are additional options.

          Home Equity Loans

          Your home equity can be a lifeline to getting back in fit financial shape. Suitable for larger debts, long-term expenses, and other large expenses like home improvements or weddings, home equity loans typically offer better interest rates since it’s secured by your home.

          There are a number of reasons why you may want to consider a home equity loan for debt consolidation:

          • Rates may be better than unsecured loans like credit cards or personal loans.
          • If you have a lower credit score but still qualify, your APR with a home equity loan typically won’t go up as high as it would with an unsecured loan. Discover Home Equity Loans offers rates from 3.99%-11.99%.*
          • Fixed interest rate, terms and monthly payment amounts.
          • You can borrow more than other loan types. With Discover Home Equity Loans, borrow from $35,000-$200,000.

          *Your APR will be between 3.99% and 8.99% for a loan in first lien position and 3.99% and 11.99% for a loan in second lien position. The APR is based on loan amount and a review of creditworthiness, including income and property information, at the time of application. The lowest APR is available to consumers with the best credit and other factors, including the loan term. Loan amounts available from $35,000 to $200,000.

          If you have a large amount of debt on high interest rate cards or loans, a home equity loan can reduce payments, interest amounts and more. This can allow you to get back on your feet and pay just a single bill each month. Minimizing your bills makes it easier to control your finances and ensure you’re on the right path to financial stability.

          As with all loan products, it’s best to work with a professional lending partner to make the most of your situation. There’s a debt consolidation vehicle out there for everyone. Find yours and get on the road to fiscal recovery.

          Start the conversation with your Personal Banker.

          Call us at18553613435

          Monday to Friday 8am–12am ET