CBS News
3 cheapest ways to pay off credit card debt
Getty Images
Credit card debt can be expensive. Depending on how high your credit card debt is, you could end up paying thousands of dollars in interest on what you owe — and the pay-off process could take decades.
And, right now, your credit card debt could be costing you more than it has in the past. The federal funds rate is currently paused at a 23-year high, and rates on credit cards and other lending products are up in tandem. In turn, your required minimum credit card payments have likely increased.
That can be difficult to deal with in today’s inflationary environment. After all, higher prices of consumer goods and services may already be squeezing your budget. And if you’re tired of carrying balances on your credit cards from month to month, you may be looking for the cheapest ways to pay off your debt. The good news is that you have multiple options to choose from.
Find out how much money you could save with a debt relief service now.
3 cheapest ways to pay off credit card debt
Here are some of the cheapest ways to pay off your credit cards:
Debt relief services
Credit card debt relief companies can reduce the cost of your credit card debt in a couple of ways. First, these programs typically work to negotiate better terms with your lenders on your behalf, which could result in lower interest rates or card balances. Moreover, debt relief service providers usually create a payment plan that’s designed to get you out of debt as fast as possible. And, paying your debts off faster could lead to interest savings.
The cost of using a debt relief service could also be cheaper compared to other routes, like bankruptcy, which can come with attorney fees, filing fees and other costs. For example, debt relief providers are prohibited from charging fees for their services until they settle your debt for less than you owe or otherwise substantially lower your debts.
And, when you are charged fees related to the debt settlement, it’s typically a percentage of the enrolled debt. These fees generally range from 15% to 25% but can vary by debt relief service.
You may also be able to avoid fees entirely by negotiating with the credit card companies to lower your rate or balance on your own. However, do-it-yourself negotiations may not be as successful as negotiations that are handled by an expert, and the process could take some time to work through.
Find out how a debt relief service can help you tackle your credit card debt today.
Income-driven repayment plans
Some credit card companies may also offer income-driven repayment plans, also known as financial hardship programs, to customers who are having a hard time keeping up with their payments.
“If a customer is in legitimate financial trouble, credit card companies have an incentive to offer short term relief if it means (1) maintaining the customer relationship and (2) getting paid back in the long run,” says Justin Leto, CEO and co-founder of Idea Financial.
So, if you’re in a financial bind and can’t make your credit card minimum payments, it could help to give your lenders a call. They may be willing to reduce your interest rates and minimum payments temporarily, offering you the ability to save money while you pay your debt off.
And, there are rarely extra fees tied to these types of hardship programs, so they can be a cheap way to tackle what you owe on your cards. However, you’ll likely only qualify for this type of program if you can show that there’s a genuine need for it.
“Of course, there are businesses and consumers who will opportunistically seek payment relief when it isn’t justified, so lenders must institute strict policies regarding if, and when, a customer will be granted relief,” says Leto.
Home equity loans
If you own your home, your equity could be a cheaper way for you to pay off your credit card debt. For example, you may be able to use a home equity loan or home equity line of credit (HELOC) to borrow against your equity at a competitive interest rate and then use the money to pay off your credit card debt.
For example, right now, the average credit card interest rate is currently over 21%, while the average HELOC interest rate is just 9.01%. So by essentially consolidating your current card balances using a HELOC to pay them off, you may be able to significantly reduce the cost of paying off your credit card debt.
And you may be able to tap into an even lower rate with a home equity loan. The average home equity loan currently has a rate of 8.59%, so using this type of loan to pay your credit cards off can offer meaningful interest savings.
It’s worth noting, though, that you’ll typically have to pay closing costs on your home equity loan or HELOC. However, depending on the overall savings the lower rate can offer, the additional fees may be worth it to get the interest savings a HELOC or home equity loan can provide.
The bottom line
Credit card debt can be costly, but there are ways to cut that cost. If you’re struggling to make your minimum payments, some of the cheapest options may be to reach out to a debt relief provider or speak to your creditors directly for help. Or, if you own your home, you may want to consider using a home equity loan to pay off your high-interest credit card balances to save money over the long run.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Getty Images
Gold’s meteoric rise in 2024 has captured the attention of investors across the globe, as the precious metal has shattered numerous price records and posted gains of about 33% year-to-date — far outpacing the returns on more traditional investments. This remarkable performance hasn’t just been appealing to seasoned investors, either. It has also sparked interest among newcomers to the investment world, many of whom see the potential for significant returns in an asset traditionally known more for stability than dramatic growth.
The allure of gold in today’s market is understandable. Watching an investment vehicle post consistent gains can make the decision to invest seem straightforward, particularly for those just beginning their investment journey. However, the decision to invest in gold requires more nuanced consideration than simply following market momentum. While gold’s recent performance might suggest an easy path to profits, its role in an investment portfolio is complex and multifaceted.
And the current market dynamics present both opportunities and challenges for beginners, in particular. After all, the confluence of factors driving gold’s price appreciation creates a complex landscape that can be difficult to navigate. So should beginners take the plunge and add gold to their portfolios this November? That’s what we’ll break down below.
Compare your gold investing options here.
Should beginners invest in gold this November?
While the decision to invest in gold is ultimately a personal one based on factors like your investment goals and diversification needs, there are a few good reasons to consider buying in as a beginner, including:
The potential for short-term price growth
Gold is typically seen as a long-term investment, but the past year has presented a unique opportunity for short-term gains. The price of gold has surged from about $2,064 per ounce on January 1 to where it sits today at about $2,745 per ounce (as of October 24, 2024). And while that’s an impressive price run, there’s a good chance it’s not over. Many analysts expect that the price of gold could exceed $3,000 by the end of the year, meaning that beginners have a rare chance to invest now and potentially turn a quick profit in the coming weeks or months.
So, if you’re new to investing and looking for a way to capitalize on market trends, gold could provide a relatively low-risk opportunity for significant returns in the short term. While it’s generally advisable to hold onto gold for the long run, current market conditions offer a window for quicker profits, making this November an opportune time to get involved.
Protect your portfolio with gold today.
The protections it offers during uncertain times
Geopolitical tensions are running high as the year draws to a close, with conflicts and global uncertainty making financial markets more unpredictable. That’s where gold can come in handy, especially for beginners. Gold has historically been seen as a safe haven during times of geopolitical unrest, as its value tends to rise when other assets face volatility or decline due to external shocks. So for beginners looking to safeguard their portfolios against unpredictable global events, gold offers a layer of protection.
Whether it’s trade disputes, political instability or other conflicts, these factors can negatively affect traditional assets like stocks and bonds. By investing in gold, beginners can shield their portfolios from sudden downturns caused by such events. November is an especially relevant time to consider this, as upcoming political events could lead to more market swings. Owning gold in such times provides a cushion against potential disruptions.
The affordability and accessibility it offers
Another appealing aspect of investing in gold as a beginner is the variety of ways you can invest in it. Whether your goal is to buy physical gold, invest in a digital asset like a gold exchange-traded fund (ETF) or gold stocks or something else entirely, gold can be an accessible option regardless of your budget, as there are plenty of opportunities to get exposure without needing a large sum of money upfront.
For beginners, this flexibility is a huge advantage. You can start small by purchasing fractional shares of gold ETFs or gold-based mutual funds, allowing you to dip your toes into the precious metal market without committing significant capital. This makes November an ideal time for new investors, as it allows you to participate in the ongoing price surge while tailoring your investment to your financial situation.
The bottom line
Investing in gold this November presents a unique opportunity for beginners. Whether you’re looking to turn a quick profit as gold prices continue to rise or are simply trying to find an affordable, accessible entry point into the precious metals market, gold offers both short-term and long-term benefits. By adding gold to your portfolio, you’ll also gain valuable diversification that can help protect your investments during periods of economic uncertainty. As with any type of investment, though, just make sure you’ve fully researched your options and are sure it’s the right move for your money.
