Table of Contents
- It’s normal to have debt. It’s what you do with it that matters
- There may be a faster way to pay down credit card debt
- Interest costs both money and time
- Many Americans struggle to pay for medical care
- Personal loans can help with expenses and savings
- Average FICO® Scores show positive gains
1. It’s normal to have debt. It’s what you do with it that matters
Total household debt in the U.S. adds up to trillions of dollars. So, if you have debt, you’re not alone. The important thing is to have a plan for paying it back in a way that works with your budget.
Start planning now if you haven’t already, and put your plan into action today. Assessing your total monthly income and expenses is a good first step. This will help you get an idea of where you might be able to reallocate funds to debt repayment.
Especially if your debt is keeping you from reaching other financial goals, it’s critical that you pay it off as soon as possible.
2. There may be a faster way to pay down credit card debt
American households carry an average of about $6,000 in credit card debt, according to a recent NerdWallet study.
While credit cards are quite useful, it can be challenging to pay credit card debt down if it comes with higher or variable-rate interest. And in today’s rising rate environment, they’re only getting more expensive.
No matter how much credit card debt you have, you might be able to pay it down faster with a loan for debt consolidation.
Debt consolidation allows you to combine many different loans (or credit card balances) into a single loan with one set regular monthly payment and a defined repayment term. In addition to simplifying your life and possibly helping you pay your debt off sooner, you could also save money in interest.
3. Interest costs both money and time
The longer you have debt, the more it will cost you. As an example, imagine you have a balance of $15,000 in credit card debt with an annual percentage rate (APR) of 16%, and your monthly payment is $297.
In the end, carrying that debt would cost you $10,231 in interest (assuming you don’t make any new purchases). And it would take you more than seven years to pay off. Some people even cope with higher interest rates by lowering their monthly payments on credit cards; this means it takes even longer to pay off.
The bottom line? It’s always a good idea to find ways to reduce higher-interest debt, but it’s especially important as interest rates continue to rise. Once you are debt-free, you can redirect those payments toward other important goals, like saving for a house or retirement.
4. Many Americans struggle to pay for medical care
More and more adults are skipping medical care today because they can’t afford it. Specifically, people are putting off seeing a specialist (52%), being seen for a sickness (41%), and undergoing treatment plans recommended by their doctor (31%), according to a survey* by Discover® Personal Loans.
Struggling to pay for medical costs can be stressful, especially if you’re already dealing with medical debt.
Even with the benefit of insurance, medical debt from uncovered or partially covered procedures can build up quickly. But with the right planning, you can pay off your medical debt and get back on the road to financial wellness. In addition to careful budgeting, a personal loan could be a key part of the solution.
5. Personal loans can help with expenses and savings
Many people use personal loans to cover major expenses like a home renovation or a special vacation. But a personal loan can help you build savings, too.
For example, when you consolidate debt with a personal loan, you could put any money you save in interest toward an emergency or retirement fund.
Explore this simple budgeting tool to help you organize your finances. Then you can decide if a personal loan might be right for you.
6. Average FICO® Scores remains steady
The average FICO® Score** in the U.S. rose for several years, even through the pandemic, and it remained steady through most of 2022. Many Americans reduced their debt and increased their savings during the pandemic. That’s a reason to feel positive about your own ability to achieve financial goals. You can work through challenges and setbacks and come out stronger on the other side.
Knowledge is power
Personal finance is a complicated subject, and everyone’s situation is different. For some people, medical or credit card debt is a top concern. Others might worry about how they’ll pay for emergency expenses.
But whatever your financial goals might be, being proactive can help. Educating yourself about personal finance and exploring options for reducing your debt, like a personal loan, are important first steps.
With the right knowledge and consistent action, you’ll start hitting your financial milestones. Then, you can start to enjoy managing your money.
So, why not work on your personal finance strategy today?
