Personal finance expert Sharon Epperson outlines practical strategies to pay off loans and reduce debt. Tips include prioritizing high-interest balances, consolidating loans, and creating a realistic repayment plan.

New York

A recent quarter-percent rate cut is expected to lower borrowing costs, particularly for variable-rate products such as credit cards and auto loans. Individuals are encouraged to review their budgets, cut unnecessary expenses, and seek additional income through side jobs or selling unused items to free up cash for debt repayment.

To reduce credit card debt, experts suggest asking card issuers for lower rates, setting up automatic payments above the minimum, and considering 0% balance transfer offers. Homeowners can pay down mortgages faster by making biweekly payments, rounding up payments, or refinancing if feasible. For car and student loans, options include loan modifications, trading in vehicles for lower payments, and enrolling in income-driven repayment plans for federal student loans. Borrowers are advised not to refinance federal loans into private ones due to the loss of protections.

Strategies to pay down debt: what you need to know

What kind of of an impact could people feel because of the quarter of a percent rate cut this week. Well the rate cut is definitely going to help with borrowing costs, it's going to lower borrowing costs eventually also lower saving rate. So you will see some of the impact but the impact will be mostly felt on variable rates. So that's credit cards auto loans that's we're going to see it first what you may you maintain there some some ways that we can ease anxiety over finances even maybe find some cash so when you talk about some shrinking jet people are like well how I don't have any money I need to get some money to do that and so let's start there start by finding some extra cash make the budget figure out what your monthly income is track your expenses to see what you can cut and then figure out the things that you can cut a lot of people it is it is scary but there are other things that you can do their stuff that you might have around the House appliances a close other things that you may want to sell. They're also limiting your credit card debt and just using cast just using your debit card on your phone for a week, you'll just see how much you might save by not doing that impulse buy with a credit card and also think about what you can do to get that side job and do something to make some extra cash a little side hustle little side hustle will help so those are some great everyday tips but when it comes to lowering our credit card debt. How do we do it well once you have that extra cash you can put it toward the debt but the one thing that you may want to try to do yes, the Federal Reserve has lowered rates but have you asked the card company whether they can lower your Survey show that many people who do that actually get a lower rate so it doesn't hurt to just ask and find out if you can get a lower rate. Setting auto payment for your payments and more than the minimum balance due is going to be a way that you're slowly going to eat away at that debt to putting on a pie don't have to think about it 0% interest credit cards, those introductory offers that allow you do a balance transfer you may have to pay a fee 3 to 5%. But the idea of being able to to pay 0% interest for 12 to 21 months. That's a great way to really focus on paying down that debt don't use that card use that card just to put the balance transfer on and then pay it off in full by the time that interest rate goes from 0 to perhaps a sign you want to break down the math for us to show. Maybe if you had say a transfer that you're doing about $6,000 on a transfer and you had 15 months for it to be covered then you might be able to with a 0% interest rate then you might be able to have monthly payments of $400 a month over 15 months that way you be sure to pay that off and that pays it off and it's done and pay it off and it's done OK to start to talk about that let's talk about homeowners who are looking to say yes, you want to maximize your mortgage as best you can some people can think the biweekly payments that they can afford that in their budget that's a good way to to make a knock it down knock it down a little bit. I love this idea of rounding up because you know it's it might just be 75 bucks but over time that rounding up can make a difference. You can refinance if you can find a lower rate and it makes sense that might be difficult right now for some people to do that and shortening the loan term is another way to make sure that you're maximizing your mortgage and think about whether or not they're going to be in a prepayment penalties if you do decide to pay something off and what if you're looking for a little breathing room, let's say it's a better manage like a car loan or a student loan what would you say well with a car loan and with a student loan, yeah, I think we want to this one with the student loan with the car loan you want to make sure that you can really afford this card if you care if you can't sell it traded and get a cheaper car with lower payments and work that way if you really are in financial hardship as for a loan modification, some lenders will allow you to do that in terms of student loan debt those income driven repayment plans are really great because you're paying based on your income, you don't have right now you don't make a payment right now so that's that's something that you really want to look at go to student a dot gov to find the right payment plan for you for your federal loans and then for private loans. You may want to refinance you do not want to refinance your federal loans into private loans because there are a lot of more protections right it is something to consider okay, what yeah.

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