Strategies to Slash Debt, Boost Your Credit Score, and Stay On the Path to Success
By StoryStudio on August 14, 2022 11:19 AM
In challenging economic times, many people find themselves burdened with debt and face difficulties in managing their finances effectively. Whether the problem is credit card debt or other piled-high balances that seem hopeless, finding strategies to consolidate debt and improve your credit score is crucial to achieving long-term financial stability. Here to walk people through solutions is Brandy Guzman, VP of Branches and Operations for Texas Bay Credit Union.
Make sure the interest rate is lower than the average rate of your existing debts.
Evaluate the loan’s terms and conditions: a longer repayment period could result in paying more interest over time.
Debt Consolidation Loans
& What to Watch Out for
Another effective way to consolidate high-interest debt is through balance transfers. By taking advantage of a balance transfer, you move your credit card balances from one card to another with a lower introductory interest rate – sometimes even 0% APR. This allows you to pay off your debt at a reduced interest rate for a specified period, typically 12 to 18 months.
While balance transfers can be an excellent way to save on interest, it’s important to be aware of any transfer fees and ensure that you can pay off the balance before the introductory rate expires. When you pay off your credit card balance, which increases your available credit balance, your credit score will go up too.
“It’s really important to make payments on time and keep those balances manageable,” Guzman advises. “Make a budget and a realistic repayment plan to avoid being stuck with paying back all the accrued interest after the promotional period.”
Refinancing your mortgage or auto loan can also be a viable option to consolidate debt and reduce interest rates. Keep in mind, while interest rates might be higher than they were in recent years, it’s important to remember that was an anomaly and rates are still historically lower than in past decades.
“One of the biggest eye openers for our members is looking at their credit cards and realizing their interest rates are above 20% on balances they have been carrying,” Guzman says, noting that Texas Bay doesn’t charge anything over 18%. “So if you’re thinking about using equity in your home or auto loan that was financed at 4%, even if it will increase to 6 or 7% with a consolidation loan, in some cases, it might still make sense.” It really depends on your unique financial situation and financial goals.
When you have already built equity in your home or car and need additional funds for debt consolidation, the decision to refinance should only be made after considering current market rates and how they compare to your existing loan rates.
Taking control of your finances and boosting your credit score is possible with the right strategies, yet having a strong financial foundation is also essential for a more secure and prosperous future. Choosing a reliable and supportive credit union like Texas Bay can provide you with the advice needed for a smoother journey, and then you can see for yourself why their glowing Google reviews have them as the #1 rated financial institution in Houston.
“We make it our absolute mission to be our member's trusted financial partners,” Guzman says. “When you come to us, we promise to listen to what your needs and goals are and help you meet them. We’re going to celebrate with you as you achieve each goal and then move on to the next one with you. That’s definitely what you’ll experience when you choose Texas Bay.”
Choosing Texas Bay as Your Partner
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DISCOVER
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What to Know About Balance Transfers
Refinancing Mortgages and Auto Loans
How to Stay on Track
Managing your finances correctly is another vital aspect of securing a brighter financial future. Staying on track requires careful attention and frequent monitoring to see to it that you are making progress toward your objectives.
Manage Accounts On the Go with Mobile Banking
There are numerous benefits to online and mobile banking, and taking the time to enroll in yours can be a lifesaver. Brandy Guzman suggests downloading the app and peeking at it every single day. Doing this regularly will also serve as a great reminder to yourself when you have a goal that you’re trying to meet. It can also help prevent potential losses that could occur on your accounts due to fraud.
“It’s a really good accountability measure, because you’re making sure that you’re not spending on things that you shouldn’t,” Guzman adds.
Not only is mobile banking incredibly convenient to access on the go, but it provides real-time account monitoring, enhanced security, and fraud protection to make sure nothing is being spent without your consent.
ABOUT TEXAS BAY CREDIT UNION
Founded in 1936, by Houstonians, for Houstonians, Texas Bay works tirelessly to provide the best service to their members and works to find each member a tailor-made solution to help them reach their financial dreams. Visit www.texasbaycu.org for more info, including branch locations and hours of operation.
SPONSORED BY Texas bay credit union
Budgeting and Saving
A CD – which stands for Certificate of Deposit – is a valuable tool for meeting financial goals. Many people are unfamiliar with CDs, but they offer a great opportunity to save money even when it seems impossible. Texas Bay Credit Union provides what they call a “Save to Win CD” that allows customers to start with as little as $100 and earn a high rate on their savings.
“What’s great about it is that it gives you the opportunity to save when you think that you can’t,” Guzman says. The money is automatically deposited from your paycheck, creating an “out of sight, out of mind” savings strategy that accumulates over time.
Unlike regular savings accounts, where money can easily be transferred out, the Save to Win CD keeps the money locked in, making it easier to save. This builds a savings buffer for emergencies and future expenses, such as buying a home or handling unexpected car repairs, reducing future financial stress, and helping you meet your financial goals.
Get In Touch
Brandy Guzman
Evaluate the loan’s terms and conditions: a longer repayment period could result in paying more interest over time.
Make sure the interest rate is lower than the average rate of your existing debts.
Your credit score might take a slight dip when you first receive the loan, but making monthly payments on time, and paying off high balances on your credit cards, will significantly increase your score.
Stick to the goal: You still need to practice personal financial discipline or else you risk going into greater debt.
One of the most effective strategies to manage multiple debts is through debt consolidation loans. Debt consolidation involves combining all your outstanding debts into one single loan with a lower interest rate, making it easier to manage and pay off.
“Generally, you want to do this for a number of reasons,” Guzman says. “Credit card rates can be upwards of 20%. When you get a good debt consolidation loan, those rates are considerably lower, especially if you're with a credit union.”
By consolidating your debts, you eliminate the stress of juggling multiple credit card payments, reduce your interest costs significantly, and can significantly improve your credit score. This not only simplifies your financial life but also helps you stay on track to become debt-free sooner.
However, when considering debt consolidation, it’s essential to carefully assess a few key details. Here’s a quick cheat sheet to avoid common mistakes:
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Strategies to Slash Debt, Boost Your Credit Score, and Stay On the Path to Success
Debt Consolidation Loans
& What to Watch Out for
Brandy GUZMAN
In challenging economic times, many people find themselves burdened with debt and face difficulties in managing their finances effectively. Whether the problem is credit card debt or other piled-high balances that seem hopeless, finding strategies to consolidate debt and improve your credit score is crucial to achieving long-term financial stability. Here to walk people through solutions is Brandy Guzman, VP of Branches and Operations for Texas Bay Credit Union.
What to Know About Balance Transfers
One of the most effective strategies to manage multiple debts is through debt consolidation loans. Debt consolidation involves combining all your outstanding debts into one single loan with a lower interest rate, making it easier to manage and pay off.
“Generally, you want to do this for a number of reasons,” Guzman says. “Credit card rates can be upwards of 20%. When you get a good debt consolidation loan, those rates are considerably lower, especially if you're with a credit union.”
By consolidating your debts, you eliminate the stress of juggling multiple credit card payments, reduce your interest costs significantly, and can significantly improve your credit score. This not only simplifies your financial life but also helps you stay on track to become debt-free sooner.
However, when considering debt consolidation, it’s essential to carefully assess a few key details. Here’s a quick cheat sheet to avoid common mistakes:
Refinancing Mortgages and Auto Loans
Another effective way to consolidate high-interest debt is through balance transfers. By taking advantage of a balance transfer, you move your credit card balances from one card to another with a lower introductory interest rate – sometimes even 0% APR. This allows you to pay off your debt at a reduced interest rate for a specified period, typically 12 to 18 months.
While balance transfers can be an excellent way to save on interest, it’s important to be aware of any transfer fees and ensure that you can pay off the balance before the introductory rate expires. When you pay off your credit card balance, which increases your available credit balance, your credit score will go up too.
“It’s really important to make payments on time and keep those balances manageable,” Guzman advises. “Make a budget and a realistic repayment plan to avoid being stuck with paying back all the accrued interest after the promotional period.”
How to Stay on Track
Refinancing your mortgage or auto loan can also be a viable option to consolidate debt and reduce interest rates. Keep in mind, while interest rates might be higher than they were in recent years, it’s important to remember that was an anomaly and rates are still historically lower than in past decades.
“One of the biggest eye openers for our members is looking at their credit cards and realizing their interest rates are above 20% on balances they have been carrying,” Guzman says, noting that Texas Bay doesn’t charge anything over 18%. “So if you’re thinking about using equity in your home or auto loan that was financed at 4%, even if it will increase to 6 or 7% with a consolidation loan, in some cases, it might still make sense.” It really depends on your unique financial situation and financial goals.
When you have already built equity in your home or car and need additional funds for debt consolidation, the decision to refinance should only be made after considering current market rates and how they compare to your existing loan rates.
Managing your finances correctly is another vital aspect of securing a brighter financial future. Staying on track requires careful attention and frequent monitoring to see to it that you are making progress toward your objectives.
Manage Accounts On the Go with Mobile Banking
There are numerous benefits to online and mobile banking, and taking the time to enroll in yours can be a lifesaver. Brandy Guzman suggests downloading the app and peeking at it every single day. Doing this regularly will also serve as a great reminder to yourself when you have a goal that you’re trying to meet. It can also help prevent potential losses that could occur on your accounts due to fraud.
“It’s a really good accountability measure, because you’re making sure that you’re not spending on things that you shouldn’t,” Guzman adds.
Not only is mobile banking incredibly convenient to access on the go, but it provides real-time account monitoring, enhanced security, and fraud protection to make sure nothing is being spent without your consent.
Choosing Texas Bay as Your Partner
Budgeting and Saving
A CD – which stands for Certificate of Deposit – is a valuable tool for meeting financial goals. Many people are unfamiliar with CDs, but they offer a great opportunity to save money even when it seems impossible. Texas Bay Credit Union provides what they call a “Save to Win CD” that allows customers to start with as little as $100 and earn a high rate on their savings.
“What’s great about it is that it gives you the opportunity to save when you think that you can’t,” Guzman says. The money is automatically deposited from your paycheck, creating an “out of sight, out of mind” savings strategy that accumulates over time.
Unlike regular savings accounts, where money can easily be transferred out, the Save to Win CD keeps the money locked in, making it easier to save. This builds a savings buffer for emergencies and future expenses, such as buying a home or handling unexpected car repairs, reducing future financial stress, and helping you meet your financial goals.
Taking control of your finances and boosting your credit score is possible with the right strategies, yet having a strong financial foundation is also essential for a more secure and prosperous future. Choosing a reliable and supportive credit union like Texas Bay can provide you with the advice needed for a smoother journey, and then you can see for yourself why their glowing Google reviews have them as the #1 rated financial institution in Houston.
“We make it our absolute mission to be our member's trusted financial partners,” Guzman says. “When you come to us, we promise to listen to what your needs and goals are and help you meet them. We’re going to celebrate with you as you achieve each goal and then move on to the next one with you. That’s definitely what you’ll experience when you choose Texas Bay.”
GET IN TOUCH
Stick to the goal: You still need to practice personal financial discipline or else you risk going into greater debt.
Your credit score might take a slight dip when you first receive the loan, but making monthly payments on time, and paying off high balances on your credit cards, will significantly increase your score.
SPONSORED By TEXAS BAY CREDIT UNION