With the holidays just past and vacations on the way, it’s easy to begin accruing debt. While you could carefully pay off debt separately, possibly all at different interest rates and payment dates, Purdue Federal Credit Union recommends saving time, money, and a headache by consolidating your debts into one.
Debt can be accrued from a variety of sources—student loans, medical expenses, credit card purchases, and more. Debt consolidation can combine outstanding debt from several sources into one new loan. This can simplify the repayment process, helping avoid costly missed payments and making budgeting easier by turning multiple monthly payments into one. It can also help consumers pay off their debt more quickly.
“You may have several credit cards, for instance, that you want to combine into one loan with a payment plan of up to five years,” Purdue Federal Credit Union Vice President of Lending Nikki Gaylord said. “By consolidating this way, you could pay off your debt quicker than you would if you were only making minimum payments, which could take 10 to 20 years, depending on your interest rate.”
In addition to simplifying repayment, consolidating debt into a new loan can save money in the long run by lowering the overall interest rate on the debt. It’s always important when taking any kind of debt to pay attention to interest rates in addition to principal balances.
“As soon as you get into a situation where you’re only making minimum payments on your credit cards, and you’re not seeing the principal balance be paid down, it’s time to consolidate,” Gaylord said.
When it’s time to consolidate, Gaylord recommends beginning with your local credit union. Since a credit union’s profits are returned to its members, they are able to offer lower interest rates and more flexibility on debt consolidation loans.
“Always check with your local credit union. They typically have better pricing on these types of loans. You also need to pay close attention to other associated fees, such as prepayment penalties,” Gaylord said. “Purdue Federal Credit Union doesn’t have any prepayment penalties, and as a federal credit union, the highest interest rate someone can be charged is 18%.”
In addition to lower interest rates, Purdue Federal Credit Union offers a variety of support for those looking to get out of debt, including member consultants who can help members get safe, secured loans by identifying other forms of equity, and financial wellness counselors who can help members review their financial situation, set a budget, and more.
“For instance, secured loans are a great option for many members to consolidate debt because they come with lower interest rates than other types of loans,” Gaylord said. “Our member consultants can help members identify equity that can help repay the loan. As an example, a lot of people don’t realize they can refinance a vehicle and use that equity to pay off or pay down their debt.”
Once members have consolidated their debts, Purdue Federal Credit Union and its financial wellness counselors help members avoid racking up new debt. This can include budgeting support or, in necessary cases, closing credit cards.
While consolidation isn’t a one-size-fits-all solution to handling debt, it’s a strategy that can give many in debt a helping hand in repaying what they owe. Whether you’re recovering from the holidays or want to be in good financial form for the summer, the first step is getting in touch with professionals who can help.
Purdue Federal Credit Union’s member consultants can be reached by calling 800.627.3328 Monday-Friday from 7 a.m. to 7 p.m. EST and Saturdays from 8 a.m. to Noon EST, or in-person by visiting your local branch. Those interested in what they can save by consolidating debt with Purdue Federal Credit Union can visit the credit union’s online Debt Consolidation Calculator.
To learn more about Purdue Federal Credit Union, visit purduefed.com or stop by your favorite branch at 1113 Broadway in Crown Point or 3404 Monroe St. in La Porte.
