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How to pay off your credit cards



Revolving credit debt increased 11.4 percent in May, according to the Fed’s latest report. Credit card borrowers with high balances and monthly bills could consider paying off debt with one of these methods. (iStock)

The coronavirus pandemic kept many Americans quarantined at home throughout 2020, sheltered away from high-cost activities like dining out and traveling. In addition to spending less, some consumers were able to pocket the extra money from federal stimulus checks, loan forbearances and expanded unemployment benefits. As a result, they paid down billions of dollars in credit debt last year.

But it looks like that trend may be reversing, now that the economy is revving back to its pre-pandemic state. Consumer credit increased by 10% between April and May of 2021, with revolving balances increasing by 11.4%, according to the Federal Reserve. This suggests that as Americans return back to restaurants, airports and hotels, they’re putting these discretionary expenses on their credit cards.



Revolving credit card debt is typically assessed interest, which is bad news for consumers who make the minimum payment since credit card interest rates are also rising. Between Q1 and Q2 2021, the average credit card rate on interest-bearing accounts rose from 15.91% to 16.3%, according to the Fed.

It may be tempting to resume pre-pandemic spending habits, but it’s important to regulate your spending so you’re not left with high-interest credit card debt. And if you’re like many other Americans who have racked up a credit card balance over the past few months, now is the time to pay off debt before it spirals out of control.

There are several ways to pay off credit card debt, from personal loans to balance transfers. You can compare interest rates on a variety of financial products on Credible to make sure you’re saving the most money possible while paying off debt.


3 ways to consolidate credit card debt

Credit card consolidation can help you save money in interest and pay off your debt faster. You’ll also simplify the debt payoff process by combining all of your credit card balances into one form of financing with a single monthly payment. There are three main ways to do this:

  1. Personal loan
  2. Balance transfer
  3. Secured loan

Compare your options in the sections below, and visit Credible when you’re ready to start consolidating credit card debt.


1. Personal loan

You can use a personal loan for just about anything, from financing home improvements to paying off medical bills. But by far, the most common use for a personal loan is to pay off credit card debt. Here are a few things you should know about personal loans.

  • They’re unsecured, which means they don’t require collateral. Lenders will rely on your credit history and debt-to-income ratio to determine eligibility and set your interest rates.
  • They’re issued in a lump sum, typically directly into your bank account within a few days of approval.
  • They’re repaid in consistent monthly payments over a set period of months or years, so you always know how much you owe and how long you have until your debt is paid off.

Most importantly, personal loan rates are usually lower than credit card interest rates. The average rate on a two-year personal loan was 9.58% in May 2021, compared with 16.3% for credit cards assessed interest. By securing a lower rate on a personal loan than you’re currently paying on your credit card debt, you can save hundreds of dollars in interest and get on the path to becoming debt-free.

If you decide to use a personal loan for debt consolidation, you should compare interest rates across multiple lenders to ensure you’re getting the lowest rate for your financial situation. Visit Credible to see personal loan offers tailored to you, all without affecting your credit score.


2. Balance transfer

Another common way to consolidate credit cards is to utilize a balance transfer. This involves transferring your credit card balances onto a new credit card with a lower interest rate.

Balance transfers can be particularly advantageous if you can qualify for a balance transfer card with a 0% APR introductory period. Some credit card companies will offer 0% APR periods for the first several months after you open an account, typically up to 18 months. This may give you enough time to pay off your credit card debt without ever accruing interest.

This debt consolidation method isn’t right for everyone, though. To qualify for the best offers, you’ll need a good or better credit score — defined as a score of 670 or higher using the FICO model. Plus, you may have to pay a balance transfer fee, which is usually 3-5% of the amount being transferred. And be aware of credit card balance transfer limits, since you may owe more debt than you’re able to transfer.

Find the right credit card issuer for your needs on Credible.


3. Secured loan

If you have fair or bad credit and you can’t qualify for a personal loan or balance transfer card, consider paying off your credit card debt with a secured loan instead. 

Secured loans require collateral, so it’s less of a risk for the lender. The biggest drawback, though, is that the lender can seize the asset you used as collateral if you don’t repay the loan. That being said, there are a few types of secured loans to consider when paying off credit card debt:

  • 401(k) loan: Certain retirement plans allow you to borrow a low-interest loan from the money you’ve invested in your retirement account. Since you’re borrowing from yourself and not a lender, you don’t have to go through a credit check, and you’re paying interest back to yourself. 401(k) loans are limited to $50,000 or half the vested amount in your retirement account, whichever is less.
  • Secured personal loan: Select lenders offer loans that are secured by the value of your vehicle. These are a good option if you need a personal loan for bad credit but you don’t want to pay extremely high interest rates, but they can be risky since you’ll lose access to transportation if you don’t repay the loan.
  • Cash-out mortgage refinancing: With high home equity and low mortgage rates, now is a good time for homeowners to refinance. When you choose the cash-out mortgage refinance option, you’ll take out a loan that’s larger than your current home loan and use the extra money to pay off credit card balances.

It’s always critical to compare interest rates when taking out a financial product, and that’s especially true when it comes to mortgage refinancing. Mortgage rates are historically low, so there’s never been a better time to refinance. See what kind of rates you qualify for on Credible.


Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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