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4 low-cost ways to consolidate debt while rates are high
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Thanks to high inflation and the rising costs of many goods and services, credit card usage has jumped recently. And while cards can make it easier to stay afloat during challenging financial times, they’re also expensive.
In fact, according to the Federal Reserve, the average rate on credit cards is now over 21% — a number that can make even minimum payments out of reach for many.
Fortunately, there are low-cost ways to pay off those cards and get your debt under control.
Find out how easy it could be to get rid of your high-rate debt today.
4 low-cost ways to consolidate debt while rates are high
Here’s how experts say you should consolidate your credit cards and combat today’s higher rates.
Debt consolidation loan
Taking out a debt consolidation loan is one potential avenue to explore. With this, you take out a loan with a lower rate than your credit cards have, and then use the loan to pay off all your card balances.
“These allow you to combine multiple debts into a single payment,” says Josh Richner, founder of FaithWorks Financial.
Though you can get consolidation loans from big banks and lenders, Richner says credit unions typically offer the lowest rates. “They’re member-focused and can provide more favorable terms,” he says.
Learn more about your best debt relief options now.
Debt management plan
Another option is a debt management plan. This is when you work with a debt relief company or credit counseling agency that works with creditors on your behalf. They may negotiate lower interest rates or get certain fees waived. You then make a single monthly payment to the company, and they gradually pay down your debt for you.
Richner calls DMPs “an excellent option” if you have multiple credit card balances you want to consolidate.
“The best way to pay as little as possible is to work with a debt professional who can get you on a debt management or debt settlement program,” says Howard Dvorkin, chairman of Debt.com. “A debt management plan can cut your total debt payment by up to half by reducing or eliminating the interest rates.”
Balance transfer cards
A balance transfer credit card is another strategy to explore. While it might sound strange to pay off one credit card with another, when done right, it can save you significantly on interest.
For example, if you can get a credit card with a 0% interest rate for a year, you can use it to pay off your existing credit card balances and then make interest-free payments for the next 12 months. This allows your money to go further and can help you pay off your debts more efficiently and affordably.
“If you have a great credit score you can often get up to 18 months with zero interest,” Dvorkin says.
Just make sure you have a plan to pay off the balance — or transfer it to a new card before the promo rate expires.
“Why would credit card companies offer this if it wasn’t making them money?” Dvorkin asks. “They know most people won’t pay off their credit card debt during those months. Then, when the teaser rate is over, they jack up the interest rate, often higher than you were paying before.”
Home equity
If you own a home, you may also be able to borrow from your home equity to more affordably pay off your credit card balances. There are three options: Home equity loans, home equity lines of credit (HELOCs), and cash-out refinances.
“Since these loans are secured by your home, they typically come with lower interest rates,” Richner says, noting that cash-out refinances are usually the most affordable, with home equity loans after that.
Still, these loans are not without risk. If you fail to make payments, the lender could foreclose on your house. As Richner puts it, “It’s crucial to consider the risk of losing your home.”
The bottom line
If you want to make sure you get the best rates on whatever debt solution you decide on, it’s important to have a good credit score before applying. Higher credit scores usually equate to lower interest rates and better terms, which will help minimize your costs when paying down debt.
You can also think about bringing in a co-signer with good credit, as this can help you qualify for lower rates, too.
Finally, shop around for your loan, debt relief company, or balance transfer card.
“Don’t settle for the first offer you receive,” Richner says. “And don’t be afraid to negotiate terms with lenders. Some may be willing to lower interest rates or waive fees to secure your business.”
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Yellowstone hiker burned when she falls into scalding water near Old Faithful, park officials say
Yellowstone National Park, Wyo. — A New Hampshire woman suffered severe burns on her leg after hiking off-trail in Yellowstone National Park and falling into scalding water in a thermal area near the Old Faithful geyser, park officials said.
The 60-year-old woman from Windsor, New Hampshire, along with her husband and their leashed dog were walking off a designated trail near the Mallard Lake Trailhead on Monday afternoon when she broke through a thin crust over the water and suffered second- and third-degree burns to her lower leg, park officials said. Her husband and the dog weren’t injured.
The woman was flown to Eastern Idaho Regional Medical Center in Idaho Falls, Idaho for treatment.
National Park Service / Jacob W. Frank
Park visitors are reminded to stay on boardwalks and trails in hydrothermal areas and exercise extreme caution. The ground in those areas is fragile and thin and there’s scalding water just below the surface, park officials said.
Pets are allowed in limited, developed areas of Yellowstone park but are prohibited on boardwalks, hiking trails, in the backcountry and in thermal areas.
The incident is under investigation. The woman’s name wasn’t made public.
This is the first known thermal injury in Yellowstone in 2024, park officials said in a statement. The park had recorded 3.5 million visitors through August this year.
Hot springs have injured and killed more people in Yellowstone National Park than any other natural feature, the National Park Service said. At least 22 people have died from hot spring-related injuries in and around the 3,471-square-mile national park since 1890, park officials have said.
TRENTON, N.J. — Democratic Newark City Council President LaMonica McIver has defeated Republican small businessman Carmen Bucco in a contest in New Jersey’s 10th Congressional District that opened up because of the death of Rep. Donald Payne Jr. in April.
McIver will serve out the remainder of Payne’s term, which ends in January. She and Bucco will face a rematch on the November ballot for the full term.
McIver said in a statement Wednesday that she stands on the “shoulders of giants,” naming Payne as chief among them.
She cast ahead to the November election, saying the right to make reproductive health choices was on the ballot as well as whether the economy should benefit the wealthy or “hard working Americans.”
“I will fight because the purpose of politics and the purpose of our vote is to give the people of our communities and our nation a bold voice,” she said.
Bucco congratulated McIver on the victory in a statement but said he’s looking forward to the rematch in November.
“I am not going anywhere,” he said in an email. “We still have a second chance to make district 10 great again!”
Who are LaMonica McIver and Carmen Bucco?
McIver emerged as the Democratic candidate in a crowded field in the July special election. A member of the city council of New Jersey’s biggest city since 2018, she also worked for Montclair Public Schools as a personnel director and plans to focus on affordability, infrastructure, abortion rights and “protecting our democracy,” she told The Associated Press earlier this summer.
Bucco describes himself on his campaign website as a small-business owner influenced by his upbringing in the foster system. He lists support for law enforcement and ending corruption as top issues.
The 10th District lies in a heavily Democratic and majority-Black region of northern New Jersey. Republicans are outnumbered by more than 6 to 1.
It’s been a volatile year for Democrats in New Jersey, where the party dominates state government and the congressional delegation.
Among the developments were the conviction on federal bribery charges of U.S. Sen. Bob Menendez, who has denied the charges, and the demise of the so-called county party line — a system in which local political leaders give their preferred candidates favorable position on the primary ballot.
Democratic Rep. Andy Kim, who’s running for Menendez’s seat, and other Democrats brought a federal lawsuit challenging the practice as part of his campaign to oust Menendez, who has resigned since his conviction.