The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities. MagnifyMoney is an independent, advertising-supported comparison service which receives compensation from some of the financial providers whose offers appear on our site. We do not let compensation from our advertising partners impact the order in which products appear on the site. To provide more complete comparisons, the site features products from our partners as well as institutions which are not advertising partners.

While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Wondering whether you should pay off your credit card debt or invest your money in the stock market? Anyone can answer this question once framed appropriately. First, you need to understand the impact that stock market returns both negative and positive and interest rates on your debt have on your money.

Once you do this, the information you really need comes largely from the variables involved with the debt. This includes things like the type of debt you have, the interest rate on what you owe, and the current balance. These variables are more important in understanding whether you should pay off something like high-interest credit card debt or invest than any factors related to the stock market in any given year. Many people fear the stock market — and for good reason.

Not a great result. As you can see, the longer you were invested, the better your chances of coming out with a gain. Of course, not all year periods will produce the same results. The point here is that our investments do have the ability to withstand even the most poorly performing markets if we invest for a longer periods of time.

Unlike stock market returns, which are not guaranteed, paying down debt is as close to a guaranteed return on your money as you can get. This is true because for every dollar of debt you pay off, the less interest you pay the loan company. In other words, the faster you pay down the debt, the more money you have to use elsewhere.

Combining the two examples above can provide us with a solution to our question. Put yourself in this position for a minute. Do you invest it or pay down your credit card debt?

A good rule of thumb is to make that form of investing your top priority: The right choice for you will depend on the variables for your debt and your long-term goals. I do know one thing for sure. The answer comes in the form of taking action. Take some time to understand your financial situation and choose a path that makes sense for you. Eric Roberge is a writer at MagnifyMoney. You can email Eric at ericroberge magnifymoney. Nick Clements has worked in consumer banking for nearly 15 years and is the co-founder of MagnifyMoney.

Are you tired of paying a high interest rate on your student loan debt? We have created the most complete list of lenders currently willing to refinance student loan debt. You should always shop around for the best rate.

These 4 lenders also allow you to check your rate without impacting your score using a soft credit pull , and offer the best rates of Instead, you should look at options to avoid a default on student loan debt. Check the Federal loan repayment estimator to make sure you see all the Federal options you have right now. If you can afford your monthly payment, but you have been a sloppy payer, then you will likely need to demonstrate responsibility before applying for a refinance.

Like any form of debt, your goal with a student loan should be to pay as low an interest rate as possible. Other than a mortgage, you will likely never have a debt as large as your student loan.

If you are able to reduce the interest rate by re-financing, then you should consider the transaction. However, make sure you include the following in any decision:. Many lenders have no fee, which is great news.

If there is an origination fee, you need to make sure that it is worth paying. If you plan on paying off your loan very quickly, then you may not want to pay a fee. But, if you are going to be paying your loan for a long time, a fee may be worth paying. Variable interest rates will almost always be lower than fixed interest rates.

But there is a reason: We are currently at all-time low interest rates. This is a judgment call. Just remember, when rates go up, so do your payments. And, in a higher rate environment, you will not be able to refinance to a better option because all rates will be going up. We typically recommend fixing the rate as much as possible, unless you know that you can pay off your debt during a short time period. But, if you think you will pay it off in five years, you may want to take the bet.

Some providers with variable rates will cap them, which can help temper some of the risk. If you go to other sites they may claim to compare several student loan offers in one step. Below is what we believe is the most comprehensive list of current student loan refinancing lenders. You should take the time to shop around. So set aside a day and apply to as many as you feel comfortable with to get a sense of who is ready to give you the best terms.

SoFi read our full SoFi review was one of the first lenders to start offering student loan refinancing products. More MagnifyMoney readers have chosen SoFi than any other lender. The only requirement is that you graduated from a Title IV school.

SoFi wants to be more than just a lender. And, surprisingly, they also want to get you a date. Earnest read our full Earnest review offers fixed interest rates starting at 3.

Unlike any of the other lenders, you can switch between fixed and variable rates throughout the life of your loan. You can do that one time every six months until the loan is paid off. That means you can take advantage of the low variable interest rates now, and then lock in a higher fixed rate later. Over time, CommonBond has expanded and now offers student loan refinancing options to graduates of almost any university graduate and undergraduate.

In addition and we think this is pretty cool , CommonBond will fund the education of someone in need in an emerging market for every loan that closes. So not only will you save money, but someone in need will get access to an education. LendKey read our full LendKey review works with community banks and credit unions across the country.

Although you apply with LendKey, your loan will be with a community bank. If you like the idea of working with a credit union or community bank, LendKey could be a great option.

Over the past year, LendKey has become increasingly competitive on pricing, and frequently has a better rate than some of the more famous marketplace lenders. In addition to the Top 4 ranked by interest rate , there are many more lenders offering to refinance student loans. This list includes credit unions that may have limited membership.

We will continue to update this list as we find more lenders. This list is ordered alphabetically:. You can also compare all of these loan options in one chart with our comparison tool.

It lists the rates, loan amounts, and kinds of loans each lender is willing to refinance. You can also email us with any questions at info magnifymoney. Nick Clements is a writer at MagnifyMoney. You can email Nick at nick magnifymoney.

How to pay off debt in 8 steps - May. 28,

DEBT , Refinance , Student Loans. Even if you hate spreadsheets and numbers, coming up with a debt-destroying budget can be simple with a single rule: This rule can work with two of the most common debt repayment methods: The debt snowball method attacks smaller debts first, regardless of interest rate. The goal is to motivate you with small victories in order to go on and gain confidence to pay off larger debts. The debt avalanche method focuses on paying down debt with the highest interest rate until you pay off the balance with the lowest interest rate.

The math for your budgeting process is super-simple: Monthly income minus monthly expenses equals the amount of extra money you can apply toward your debt each month.

Check out services like Mint. Though the math is not too complicated, the harder part could be increasing the gap between your income and expenses to actually have a surplus in your budget. For now, just get a baseline of what you should have left over at the end of each month once all your bills and expenses are accounted for. Once you get this number, use it to pay more on your debt than is required. It can be the smallest debt or the account with the highest interest rate.

What matters now is that you do something to get into the habit of making extra payments on debt and accounting for it in your monthly budget. If you budget with a goal in mind, the purpose of your money becomes clearer. Any kind of money that turns out to be extra should be applied to debt to reduce your balances. For example, getting a raise is a reason for some people to increase their standard of living.

The same goes for your income tax refund check. You might bank on this money every time income tax filing season comes around. This might be one of the most difficult chunks of money to part with for the sake of paying off debt. Things can get complicated at this point. This is the fun part. You get to be creative and have more control over your debt repayment timeline. Want to get out of debt fast? It could mean adding a side hustle to the mix or getting more aggressive with cutting out or decreasing expenses.

If you pocket a large tax refund each year, ask yourself why. It is likely because you are paying too much in income taxes throughout the year. Use this IRS withholding calculator to estimate your withholdings. There are more than a few ways to decrease your income tax liability. There are so many ways to save money on so many things.

You can start small with things like eating out and having cable and work up to saving money on housing costs or refinancing student loans. Then there are the diehards who go full monty and go through full-on spending freezes on things like takeout and travel. The list of cost-cutting measures can get pretty long, but you get the point: Go through your spending with a fine-tooth comb and find out where you can save and what you could cut. Creating another stream of income sounds gimmicky, but there are ways to do it without getting caught up in scams.

You can find a part-time job, provide consulting services on the side, or even start a mini-business like dog walking or car washing. You may find that you have to try a few things before you come up with the perfect combination of low overhead, quick to start, and profitable. Just keep plugging away until something clicks. It all comes down to committing your cash to a purpose ahead of time.

Aja McClanahan is a writer at MagnifyMoney. You can email Aja here. You can also nominate and vote on charity partners to donate card profits each year and there are no foreign transaction fees if you use the card abroad.

You can get this offer if you complete the balance transfer within 60 days of opening the account. The remaining no fee cards on this list are deals for 12 months or less.

You can apply for the card without joining first. The good news is you can apply and get a decision before you become a member of the Alumni Association.

Tennessee, Florida, Georgia, Mississippi, North Carolina, and South Carolina. And you can apply without being a member. The Platinum without rewards has a lower ongoing APR, starting as low as Aspire says people with fair credit can apply for its card.

One of the eligible associations for membership is the National Native American Law Enforcement Association. You can apply as a non-member online to get a decision before joining. Xcel advises you contact them to get as sense of whether your income, credit history, and employment history will qualify for the intro rate.

Our handy, free balance transfer tool lets you input how much debt you have, and how much of a monthly payment you can afford. It will run the numbers to show you which offers will save you the most for the longest period of time. Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success:. BALANCE TRANSFERS , CREDIT CARDS. Fannie Mae, the largest backer of mortgage credit in America, recently made it a little easier for homeowners to refinance their student loans.

In an update to its Selling Guide , the mortgage giant introduced a student loan cash-out refinance feature, permitting originators that sell loans to Fannie Mae to offer a new refinance option for paying off one or more student loans.

That means you could potentially use a mortgage refi to consolidate your student loan debt. Student loan mortgage refis are relatively new. Fannie Mae and SoFi, an alternative lender that offers both student loans and mortgages, announced a pilot program for cash-out refinancing of student loans in November This new program is an expansion of that option, which was previously available only to SoFi customers. Jurek says the new program eliminates the extra fees and allows borrowers to refinance at lower mortgage interest rates.

The policy change could allow homeowners to save a significant amount of money because interest rates on mortgages are typically much lower than those for student loans, especially private student loans and PLUS loans. Brian Benham, president of Benham Advisory Group in Indianapolis, Ind.

Federal student loans are near the same levels. But private student loans can range anywhere from 3. So, the first thing anyone considering using a mortgage to refinance student loans should consider is whether you will, in fact, get a lower interest rate.

You may pay a lower rate but over a longer term. The standard student loan repayment plan is 10 years, and most mortgages are year loans. Refinancing could save you money today, but result in more interest paid over time, so keep the big picture in mind. Depending on the type of student loan you have, you could end up losing valuable benefits if you refinance student loans with a mortgage. Federal student loan borrowers may be eligible for income-driven repayment plans that can help keep loan payments affordable with payment caps based on income and family size.

Income-based repayment plans also forgive remaining debt, if any, after 25 years of qualifying payments. These programs can help borrowers avoid default — and preserve their credit — during periods of unemployment or other financial hardships. In certain situations, employees in public service jobs can have their student loans forgiven.

A percentage of the student loan is forgiven or discharged for each year of service completed, depending on the type of work performed. Some federal student loan borrowers may be eligible for deferment or forbearance, allowing them to temporarily stop making student loan payments or temporarily reduce the amount they must pay. These programs can help avoid loan default in the event of job loss or other financial hardships and during service in the Peace Corps or military.

Borrowers may also be eligible for deferment if they decide to go back to school. Enrollment in a college or career school could qualify a student loan for deferment. Some mortgage lenders have loss mitigation programs to assist you if you experience a temporary reduction in income or other financial hardship, but eligibility varies by lender and is typically not available for homeowners returning to school.

Traditional wisdom favors mortgage debt over other kinds of debt because mortgage debt is tax deductible. But to take advantage of that mortgage interest deduction on your taxes, you must itemize. As a reminder, taxpayers can choose to itemize deductions or take the standard deduction. According to the Tax Foundation, It also reduces your Adjusted Gross Income AGI , which could expand the availability of other tax benefits.

Unlike student debt, a mortgage is secured by collateral: If you default on the mortgage, your lender ultimately has the right to foreclose on your home. Refinancing student loans with a mortgage could be an attractive option for homeowners with a stable career and secure income, but anyone with financial concerns should be careful about putting their home at risk.

If you do take this option, set up a plan and a budget so you can pay off your mortgage before you retire. Janet Berry-Johnson is a writer at MagnifyMoney. You can email Janet here. Looking for a balance transfer credit card to help pay down your debt more quickly? This guide will show you the longest offers with the lowest rates, and help you manage the transfer responsibly. It will also help you understand whether you should be considering a transfer at all. Very few things in life are free.

You can find a full list of no fee balance transfers here. You have only 60 days from account opening to complete your balance transfer and get the introductory rate. New purchases also get the intro rate for 15 months. You can provide the account number for the account you want to transfer from while you apply, and if approved, the transfer will happen 10 days after your card is mailed.

You can also cancel the request within that 10 day period. If you think it will take longer than 15 months to pay off your credit card debt, these credit cards could be right for you. It is almost always better to pay the fee than to pay a high interest rate on your existing credit card. You can calculate your savings including the cost of the fee at our balance transfer marketplace.

These deals listed below are the longest balance transfers we have in our database. Each credit card company has their own criteria, and you might still be approved by one of the companies listed below. This is a basic balance transfer deal with an above average term. With this card, you also have the ability to earn cash back, and there is no late fee for your first missed payment and no penalty APR.

Hopefully you will not need to take advantage of these features, but they are nice to have. If you think it will take longer than 2 years to pay off your credit card debt, you might want to consider one of these offers. If you live in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Washington, D. In order to be approved for the best balance transfer credit cards and offers, you generally need to have good or excellent credit.

If your FICO score is above , you have a good chance of being approved. If your score is above , you have an excellent chance. However, if your score is less than perfect, you still have options. Your best option might be a personal loan. You can learn more about personal loans for bad credit here. There are balance transfers available for people with scores below The offer below might be available to people with lower credit scores.

However, it will still be better than a standard interest rate. If you use this offer to pay down debt aggressively, you should see your score improve over time and you will be able to qualify for even better offers.

That way you can apply with more confidence. If you use your credit card at an ATM, it will be treated as a cash advance. And there is no grace period, so interest starts to accrue right away. A cash advance is expensive, so beware. If you do not make your payment on time, most credit cards will immediately hit you with a steep late fee.

Once you are 30 days late, you will likely be reported to the credit bureau. Late payments can have a big, negative impact on your score. Just automate your payments so you never have to worry about these fees. Most balance transfer offers are from the date you open your account, not the date you complete the transfer. It is in your interest to complete the balance transfer right away, so that you can benefit from the low interest rate as soon as possible.

With most credit card companies, you will actually lose the promotional balance transfer offer if you do not complete the transfer within 60 or 90 days. Just get it done! Your goal with a balance transfer should be to get out of debt. If you start spending on the credit card, there is a real risk that you will end up in more debt.

Additionally, you could end up being charged interest on your purchase balances. In other words, you lose the grace period on your purchases so long as you have a balance transfer in place. Credit card companies make balance transfer offers because they want to steal business from their competitors.

So, it makes sense that the banks will not let you transfer balances between two credit cards offered by the same bank. If you have an airline credit card or a store credit card, just make sure you know which bank issues the card before you apply for a balance transfer. Nick Clements of MagnifyMoney, who once ran a large credit card business, explains how to set up a balance transfer. The calculator will show you which cards offer you the most savings on interest payments. But you might feel more comfortable with a single fixed monthly payment, and a single real date your loan will be paid off.

A lot of new companies are offering great rates on loans you can pay off over 2, 3, 4, or 5 years. You can see a list here. Use our calculator to see how your payments and savings will compare. Most credit card companies will allow you to transfer debt from any credit card, regardless who owns it.

Just remember that once the debt is transferred, it becomes your legal liability. Most banks will enable store card debt to be transferred. Just make sure the store card is not issued by the same bank as the balance transfer credit card. Here is a simple test. Divide your credit card interest rate by You can use that simplified math to get a good guide on whether or not you will be saving money. And if you want the math done for you, use our tool to calculate how much each balance transfer will save you.

With all balance transfers recommended at MagnifyMoney, you would not be hit with a big, retroactive interest charge. You would be charged the purchase interest rate on the remaining balance on a go-forward basis.

But all balance transfers recommended by MagnifyMoney do. Many companies offer very good deals in the first year to win new customers. Or your cable company could offer a big discount on the first year if you buy the bundle package.

Credit card companies are no different. These companies want your debt, and are willing to give you a big discount in the first year to get you to transfer. Completing a balance transfer is easy. If you are applying for a new credit card, most credit card companies will just ask you for the account number of the credit card that has the debt.

The transfer will then happen automatically. It will look like the balance transfer credit card made a payment for you. You can also call your credit card company, and complete the transfer easily on the phone.

If you do miss a payment, you will be charged a late fee. Credit card companies are trying to steal balances from their competitors.

So these deals are only good if you bring balances from competitors. Many credit card issuers will allow you to transfer money to your checking account.

Or, they will offer you checks that you can write to yourself or a third party. Check online, because many credit card issuers will let you transfer money directly to your bank account from your credit card. Yes, it is possible to transfer the same debt multiple times. Just remember, if there is a balance transfer fee you would be charged that fee every time you transfer the debt.

You can call the bank and ask them to increase your credit limit. However, even if the bank does not increase your limit, you should still take advantage of the savings available with the limit you have. You do not earn rewards with a balance transfer. No cash back, no points and no miles can be earned with a balance transfer. You literally pay nothing.

However, if your debt is already with Chase, or you think it will take years to pay off your debt, you should consider a longer duration offer or a personal loan. Your savings over the two years would likely be substantial, even when you include the cost of the fee.

Where you live, the types of loans you have, as well as who applied for them can determine what happens. When you pass on, your executor will notify creditors, hopefully as soon as possible. Whatever known creditors you have, the executor will notify them and forward a copy of your death certificate and request that they update their files.

He or she will also notify the three major credit reporting agencies to notify them that you are no longer alive, which will help prevent identity theft. As well, the executor will then get a copy of your credit report to figure out what debts are outstanding.

Should You Pay Off Your Debt or Invest?

Simply put, your loans are the responsibility of your estate, which means everything that you owned up until your death. Whoever is responsible for dealing with your estate usually your executor will use those assets to pay off your debts. This could involve selling off property to get money to pay it off or writing checks to do so. The rest of it then will distributed according to the wishes in your will. If you co-signed a loan or have joint accounts like credit cards , then the account holders may be fully responsible to pay off the whole debt, no matter who incurred it.

If you live in a community property state, then your spouse could be responsible for paying off your loans. If you have property in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, your spouse may have to pay back half of any community property from a marriage. However, Alaska only holds a spouse responsible if they enter into a community property agreement. The same works in reverse. Currently, there are around 30 states that enforce this law , including Maryland, Pennsylvania, and Virginia.

For more details on the different types of loans, read on to find out about what could happen to each when you pass on.

If the credit card debt was yours and yours alone, then your estate is responsible for paying off the debt. Depending on which state you live in, creditors may only have a limited time to file a claim after you have died. If your estate goes through probate, then the executor will look at your assets and debts and determine which bills should be paid first, according to the law.

Credit card companies cannot legally force family, friends, or heirs to pay back your debt unless you live in a community property state. In that case, your surviving spouse may be liable. However, if the credit card is joint, the other account holder is responsible for it. That means if a family member or business partner signed the card application as a joint account owner, then he or she will need to help pay back the loan along with your estate.

There are several options for dealing with an outstanding mortgage after you have passed away. Due to the complexity of these options, it may be worth speaking with a local estate attorney. If you are the sole owner and your mortgage has a due-on-sale clause, your lender may try to collect the entire balance of the loan or foreclose on the property. However, the CFPB has expanded protection for heirs who have inherited a home.

In contrast, a home equity loan against your home is different. A lender may have the right to force someone who inherits the home to pay back the loan right away. In a worst-case scenario, your heirs may have to sell your property to pay back your home equity loan. Car loans are similar to the other types of debt we have discussed.

The steps for handling this type of debt will depend on whose name is on the loan and where you live. If you have federal student loans, these will be discharged when you die. It will not be passed onto anyone else.

These loans will not be the responsibility of your estate. Your executor simply has to present an original death certificate or certified copy of your death certificate to your loan servicer. However, if you and your spouse co-signed Parent PLUS loans on behalf of a student, your spouse will still be responsible for the balance.

However, these policies vary by institution. You should review the terms of your loan for the specifics. Wells Fargo is an example of a company that may allow student loan forgiveness in the case of death. However, if your private loan has a co-signer, your co-signer may be legally responsible to pay back your debts. Some companies may ask for the balance immediately. Also, if you live in a community property state, your spouse may be held responsible for your student loans if the debt was acquired during the marriage.

Your children could be held responsible for your medical bills if the following scenarios are true:. The last thing your family members want to think about after you have died is outstanding loans. This is why it is essential to get organized in advance.

It may be worth speaking with a financial planner regarding the specifics of your individual situation.

They can help you review which options could best protect your heirs from your unpaid debt. Once you have passed away, your heirs should seek assistance from a qualified estate attorney. Sarah Li Cain is a writer at MagnifyMoney.

You can email Sarah Li here. Digging out of the debt hole can feel frustrating, intimidating and ultimately impossible.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you got into debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately.

You also need to understand what motivates you to succeed. Do you want to pay down your debt in the absolute fastest amount of time possible that will save more money or do you want to take some little wins along the way to keep yourself motivated? Whichever version you pick needs to set you up to be successful in your debt repayment strategy. A credit score of less than will make it difficult for you to qualify for a personal loan and will eliminate you from taking on a balance transfer offer.

If you have a credit score above , you have a good chance of qualifying for a personal loan at a much lower interest rate than your credit card debt. With new internet-only personal loan companies, you can shop for loans without hurting your score. Use this tool to see if you can get approved for a loan without hurting your score. Click here to get rates from multiple lenders in just a few minutes, without a credit inquiry hurting your score.

For people with the best scores, rates start as low as 4. Not sure what your credit score is? Click here to learn how to find out. You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do.

If you trust yourself to open a new credit card but not spend on it, consider a balance transfer. You need to have a good credit score, and you might not get approved for the full amount that you want to transfer. Your own bank might not give you a lower rate or only drop it by a few percent , but there are lots of competing banks that may want to steal the business and give you a better rate.

Our favorite offer is the Barclaycard Ring credit card from Barclays. The card charges no annual fee. It also has six tips to make sure you do a balance transfer safely. In that case, apply for the next best balance transfer deal you see. If you never want to see another credit card again, you should consider a personal loan.

You can get prequalified without hurting your credit score, and find the best deal to pay off your debt faster. With just one application, you can get multiple loan offers with rates as low as 5. One of our favorite lenders is SoFi, which has some of the lowest interest rates on the market if you have good or excellent credit. Variable interest rates start as low as 4.

You can apply now on their website, without impacting your credit score, by clicking on the apply button below. Brian Karimzad is a writer at MagnifyMoney. You can email Brian at brian magnifymoney. Balance Transfer , DEBT , Personal Loan. After all, shifting the balance from a high-interest credit card to a no-interest card means saving money on interest and paying down the balance faster.

First, you should understand three crucial elements that go into determining your credit score: When you open a new account for a balance transfer, the lender will perform a hard inquiry. One hard inquiry is unlikely to have a large impact on your credit score. Inquiries could have as much as a ten-point impact, but that would be very rare.

Should I Pay Off Student Loans or Invest My Money? | Student Loan Hero

The typical impact of one hard inquiry is about five points. However, if you apply for several cards at once, the applications could have a big impact. Opening a new credit account will lower the average age of your credit accounts, which can negatively impact your credit score in the short term. For example, if you have one 5-year-old credit card, one 3-year-old credit card, and one year-old credit card, the average age of your cards is 6 years.

When you open a new credit card for a balance transfer, you now add a less-than-one-year-old account to your balance. At the most, your average credit age will drop down to 4. Opening new credit accounts decreases your overall credit utilization ratio, which positively affects your credit score over time. However, the negative is that there are still some points taken away if you max out one card.

Maxing out a new card could reduce your credit score by about 30 points in the short term. Where balance transfers get exciting is that more of your money is going to paying off the balance of your debt as opposed to interest.

Ultimately, the best credit score comes from carrying as little debt as possible. In the end, your goal should be to pay off your debt as quickly as possible. Over the course of a year, as long as you stick to your strategy, you can eliminate that debt in a year, and your score will go up a whole lot faster than it otherwise would. The short-term impact of a balance transfer on your credit score should only concern you if you are planning on applying for a mortgage in the next six to nine months.

During this period, every point on your score counts. In that case, wait until after you get the mortgage to do the balance transfer. People are so programmed to think about their score that they sometimes lose sight of what they want the high score for.

A higher score saves you money and gets you out of debt faster. Use your good credit score to save money. Frequently, your search for aid will bring you to debt settlement firms. Debt settlement firms negotiate directly with your creditor to reduce your debt. Using these firms may sound like a lifesaver to someone struggling to pay off many debts at once. You will have to stop paying your debts.

When you begin working with a debt settlement firm, many firms will encourage you to stop paying your debts and start paying into a third-party bank account. It can take up to 36 months to fully fund a debt settlement firm account, according to the Federal Trade Commission. While you are not paying your debt, your creditor can send your account to collections or even file a lawsuit against you before the settlement firm gets a chance to negotiate. They may not succeed in settling your debt.

Once you have saved up enough money to make a lump-sum offer to the creditor, the debt settlement firm will attempt to enter negotiations. What they may not tell you is that some creditors will not work with these firms as a rule.

To avoid this, call your lender or collections agency directly to ask if they work with debt settlement agencies before you sign up for their services. If the firm is able to successfully negotiate, they will often take a cut of your savings in return.

Your credit will tank. It is important to note that debt settlement shows up on your credit report when it is reported to the credit bureaus. It will serve as a red flag to future lenders that in the past, you have not paid your debts in full.

This could result in higher interest rates, smaller lines of credit, or even failure to get approved for credit at all. You could face a hefty tax bill. To the IRS, that forgiven debt could be treated as additional income and you could owe taxes on it.

Almost all states have some form of regulation for debt relief services. Some states ban them altogether. A debt settlement firm may be licensed to operate in your state, but that does not mean they are necessarily the best for your needs. A best-case scenario, according to Pizor, is finding a company that only takes a percentage of your debt reduction in exchange for their services. If you do well, they do well. Most debt settlement firms focus on unsecured consumer debt, like credit card debt.

The most common scams in these situations involve telemarketing. The latter sounds legitimate, but in both these situations, the supposed debt settlement firm can easily run with your money. There was a flurry of these telemarketing scams following the financial crisis, prompting the FTC to add further federal regulations under their Telemarketing Sales Rules. Another tactic scammers perpetrate is using a lawyer as a front.

This lawyer may be licensed to practice in your state, but will outsource your debt woes to companies across the country, or even the world, that have no legal background. In order to avoid this scam, make sure you can sit down with the lawyer face to face in their office.

If the lawyer or a paralegal in their office will be doing the work, that is much more acceptable than someone they cannot immediately supervise in person, or someone without a background in law. Scams also frequently happen in the student loan sector. This is tricky because there are legitimate government programs that can help those with federal student loans defer payments or even forgive their remaining debt, but you should never have to pay anyone a fee in order to access these programs.

In late , the Consumer Financial Protection Bureau prosecuted two companies that were preying on those with student loans. This floor applies to debt settlement firms and consumers alike. By entering negotiations without a third party, you can save yourself the fees and potential victimization that you would risk by working with a debt settlement firm. Debt settlement leaves a scar on your credit report that will take years to fade. Just be aware that a longer term may lower your monthly payments but increase the amount of interest you pay over the course of your loan, even if your interest rate goes down or stays the same.

That being said, some debts may have passed their statute of limitations in the state in which they originated. Once that statute of limitations has been passed, it is no longer possible for the lender or collections agency to sue you for those unpaid debts. Furthermore, they may have already fallen off your credit report. However, if you make any further payments, the clock will restart and the debt will be revitalized.

Consult a consumer law attorney or a credit counselor before deciding whether to make a payment on an old debt. Brynne Conroy is a writer at MagnifyMoney. You can email Brynne at brynne magnifymoney. DEBT , debt settlement. Loans Personal Loans Student Loan Refinance Parent PLUS Loan Refinance Auto Loans Small Business Loans Private Student Loans. Free Guides How to Complain Guide to Eliminate Credit Card Debt Credit Score Guide New The Credit Monitoring and ID Theft Guide. Calculators Money Personality Quiz Balance Transfers vs.

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Skip to content Pay Down My Debt RECENT Article Author. Wednesday, November 4, Should You Invest or Pay Off Credit Card Debt?

Monday, May 8, Best balance transfer credit cards: Thursday, January 19, 5 Risks of Working with a Debt Settlement or Debt Relief Firm.

Pay Down My Debt Should You Invest or Pay Off Credit Card Debt? Wednesday, November 4, Editorial Disclaimer: Understanding the Impacts of Long-Term Investing Many people fear the stock market — and for good reason. Understanding the Impact of Paying Interest on Your Credit Card Debt Unlike stock market returns, which are not guaranteed, paying down debt is as close to a guaranteed return on your money as you can get. Eric Roberge Eric Roberge is a writer at MagnifyMoney.

What is it for? How is your credit? I am at least 13 years old. Advertiser Disclosure Share this article: Nick Clements Nick Clements has worked in consumer banking for nearly 15 years and is the co-founder of MagnifyMoney. June 3, Are you tired of paying a high interest rate on your student loan debt?

Can I Get Approved? Loan approval rules vary by lender. However, all of the lenders will want: Proof that you can afford your payments.

That means you have a job with income that is sufficient to cover your student loans and all of your other expenses. Proof that you are a responsible borrower, with a demonstrated record of on-time payments.

For some lenders, that means that they use the traditional FICO, requiring a good score. For other lenders, they may just have some basic rules, like no missed payments, or a certain number of on-time payments required to prove that you are responsible. This is particularly important if you have Federal loans. Is it worth it? However, make sure you include the following in any decision: Is there an origination fee?

Is the interest rate fixed or variable? Places to Consider a Refinance If you go to other sites they may claim to compare several student loan offers in one step. Variable Rates from 2.

This list is ordered alphabetically: Anyone can join this credit union. Interest rates start as low as 4. Variable interest rates range from 2. You can borrow for up to 20 years. Citizens also offers discounts up to 0. Fixed rates range from 4. Variable rates range from 3. Credit Union Student Choice: If you like credit unions and community banks, we recommend that you start with LendKey. Just check to see if you or an immediate family member belong to one of their featured credit union and you can apply to refinance your loan.

Laurel Road formerly known as DRB Student Loan: Rates vary by term, and you can borrow up to 20 years. Credit union membership is restricted see eligibility here. Fixed rates start at 6. This company has a unique pricing structure: You can fix the rate at 4.

The longest you can fix the rate is 10 years at 7. Given this pricing, you would probably get a better deal elsewhere. This company is the non-profit student loan program of the state of New Hampshire which has become available more broadly. Rates are very competitive, ranging from 3. First Republic Eagle Gold. The interest rates are great, but this option is not for everyone.

Fixed rates range from 2. Variable rates range from 2. Branches are located in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach, San Diego, Portland Oregon , Boston, Palm Beach Florida , Greenwich or New York City.

First Republic wants to recruit their future high net worth clients with this product. This service will find a community bank. If you want to get a loan from a community bank or credit union, we recommend trying LendKey instead. Navy Federal Credit Union: This credit union offers limited membership. For men and women who serve or have served , the credit union can offer excellent rates and specialized underwriting. Variable interest rates start at 3. Only fixed interest rates are available, with rates ranging from 3.

Just answer a few questions on their site, and you can get an indication of the rate. Just like New Hampshire, the state of Rhode Island wants to help you save. You can get fixed rates starting as low as 3. And you do not need to have lived or studied in Rhode Island to benefit.

This credit union has limited membership you can find out who can join here , but you had better be in Wisconsin. As a traditional lender, Wells Fargo will look at credit score and debt burden. They offer both fixed and variable loans, with variable rates starting at 4.

You would likely get much lower interest rates from some of the new Silicon Valley lenders or the credit unions. Nick Clements Nick Clements is a writer at MagnifyMoney.

Aja McClanahan Aja McClanahan is a personal finance blogger and founder of www. How Much Can I Throw Toward My Debt? How to Apply This Rule in Various Scenarios If you budget with a goal in mind, the purpose of your money becomes clearer. Keep Widening the Gap Between Income and Expenses This is the fun part. Adjusting Your Tax Withholdings If you pocket a large tax refund each year, ask yourself why. Decrease Your Income Tax Liability There are more than a few ways to decrease your income tax liability.

Cut Expenses Where You Can There are so many ways to save money on so many things. Increase Your Income Creating another stream of income sounds gimmicky, but there are ways to do it without getting caught up in scams. Remember the Golden Rule: Excess Cash Goes to Debt It all comes down to committing your cash to a purpose ahead of time. Aja McClanahan Aja McClanahan is a writer at MagnifyMoney.

Are these the best deals for you? The good news is we can figure it out for you. The savings from just one balance transfer can be substantial.

Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success: Never use the card for spending. Have a plan for the end of the promotional period. Make sure you set a reminder on your phone calendar about a month or so before your promotional period ends so you can shop around for a low rate from another bank.

Apply for one from another bank. Get that transfer done within 60 days. Otherwise your promotional deal may expire unused. Never use a card at an ATM. You should never use the card for spending, and getting cash is incredibly expensive. Always pay on time. If you pay more than 30 days late your credit will be hurt, your rate may go up, and you may find it harder to find good deals in the future.

Janet Berry-Johnson Janet Berry-Johnson is a CPA who writes about personal finance for parents. But is it a good idea? Here are five realities to consider before using a mortgage to refinance student loans. You need to actually have equity in your home. You could lose out on tax benefits.

You could lose your home. Income-driven repayment options Federal student loan borrowers may be eligible for income-driven repayment plans that can help keep loan payments affordable with payment caps based on income and family size. Student loan forgiveness In certain situations, employees in public service jobs can have their student loans forgiven.

Economic hardship deferments and forbearances Some federal student loan borrowers may be eligible for deferment or forbearance, allowing them to temporarily stop making student loan payments or temporarily reduce the amount they must pay.

Janet Berry-Johnson Janet Berry-Johnson is a writer at MagnifyMoney. Transparency Score Interest is not deferred during the balance transfer period There are late payment and cash advance fees. Transparency Score Interest is not deferred during the balance transfer period The range of the purchase interest rate based on your credit history There are late payment and cash advance fees. You have 90 days after you open the account to complete the balance transfer.

Complete your balance transfer as quickly as possible for maximum savings. Transparency Score Interest is not deferred during the balance transfer period.

There are late payment fees. Long low rate balance transfer card SunTrust Prime Rewards, 4. The range of the purchase interest rate based on your credit history Learn more Checklist before you transfer.

Never use a credit card at an ATM If you use your credit card at an ATM, it will be treated as a cash advance. Get the transfer done within 60 days Most balance transfer offers are from the date you open your account, not the date you complete the transfer. Savings calculator — which card is best? Balance transfer or a loan? From my spouse, partner or child?

Can I transfer debt from store cards? When am I better off not doing a balance transfer and just paying off my debt? What happens if I still have a balance at the end of the promotional period? Do I get a big interest charge? Is this a trap? How do I complete a balance transfer? What happens if I miss a payment? Can I transfer balances to another card with the same bank?

How can I use a balance transfer to pay off non credit card debt? Can I reverse a balance transfer? In most cases, you cannot. Once a balance transfer is complete, it is complete. Can I transfer a balance more than once? Can I transfer a balance to more than one card? You decide how much you want to transfer to each credit card. Can you earn points with a balance transfer?

Is there a penalty for paying off balance early? No, there is no penalty. You can pay off your debt whenever you want without a penalty. What is more important: Gathering Up Loans When you pass on, your executor will notify creditors, hopefully as soon as possible.

When Someone May Be Responsible for Paying Back Your Loans Simply put, your loans are the responsibility of your estate, which means everything that you owned up until your death.

Credit Card Debt If the credit card debt was yours and yours alone, then your estate is responsible for paying off the debt. Mortgages and Home Equity Loans There are several options for dealing with an outstanding mortgage after you have passed away. Car Loans Car loans are similar to the other types of debt we have discussed.

Student Loans If you have federal student loans, these will be discharged when you die. Your children could be held responsible for your medical bills if the following scenarios are true: You receive care in a state with a filial responsibility law. Your caregiver sues your children to collect on your unpaid bills. Final Thoughts The last thing your family members want to think about after you have died is outstanding loans.

Sarah Li Cain Sarah Li Cain is a writer at MagnifyMoney. Brian Karimzad Brian worked in banking and consumer marketing for 15 years before co-creating Magnify. The common terms for these debt repayment strategies are: Use a Balance Transfer or Multiple Balance Transfers If you trust yourself to open a new credit card but not spend on it, consider a balance transfer.

Banks are okay with you shopping around for more than one deal. Personal Loan If you never want to see another credit card again, you should consider a personal loan. Brian Karimzad Brian Karimzad is a writer at MagnifyMoney.

But how will the balance transfer impact your credit score? Inquiries — How many new accounts have you opened lately? Credit utilization ratio — How much do you owe? Your credit utilization ratio is calculated based on your total outstanding balances compared to your total credit limit. Length of credit history — How long have you been using credit? This factor looks at the age of your oldest account as well as the average length of all of your credit accounts. The longer your history, the higher your score.

How balance transfers can hurt your credit score Balance transfer applications count as a hard credit inquiry When you open a new account for a balance transfer, the lender will perform a hard inquiry. Balance transfers lower the average length of your credit history Opening a new credit account will lower the average age of your credit accounts, which can negatively impact your credit score in the short term.

How balance transfers can improve your credit score All in all, the benefits of balance transfers can far outweigh the negatives.

You will likely lower your utilization rate Opening new credit accounts decreases your overall credit utilization ratio, which positively affects your credit score over time.