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New Era Debt Solutions Debt Relief Review

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Is your debt growing each month? Are you struggling to keep up with the number of creditors to whom you owe money? Debt settlement could be an option. For a fee, private companies negotiate reduced payments with your creditors, lowering the amount of debt you owe. This is a different approach than debt consolidation, in which your existing debts are combined into one account that you then pay off with regular monthly payments.

Camarillo, Calif.-based New Era Debt Solutions specializes in debt settlement and might be able to help you settle your debt. Here’s what you need to know.

What is New Era Debt Solutions?

New Era Debt Solutions has an A-plus rating with the Better Business Bureau. The company boasts competitive settlement agreements and a high success rate.

Breakdown of New Era Debt Solutions

Let’s break things down even further:

Services offered

Debt settlement

Minimum debt required

New Era does not specify a minimum debt level to participate in its services.

Credit score

New Era says participating in debt settlement will hurt your credit score.

Debt settlement timeline

New Era says the average customer completes its debt settlement process slightly more than 27 months.

Consultation fees

New Era doesn’t list specific fees, but does say it only charges clients after a settlement has been reached. It does not charge any upfront fees.

Service fees

New Era only charges fees after a settlement has been reached.

Types of debt accepted

New Era says it can settle unsecured debt. Everything from credit cards to unsecured personal loans can be negotiated. New Era can't work with secured debt such as mortgages and auto loans. The creditors behind this debt can simply take back the collateral by foreclosing on your home or repossessing your car.

Accreditations

New Era is an accredited member of the Better Business Bureau.

Ratings

New Era has an A+ rating from the Better Business Bureau.

Service limitations

New Era does not operate in Iowa, Maine, North Dakota, South Carolina, South Dakota or West Virginia.

Free tools and resources

New Era’s website includes information about debt reduction options. It also features a debt reduction calculator that can help you calculate how long it will take you to pay down your debt.

Customer service

It’s easy to contact New Era. You can visit this page to reach out to the company online or you can call New Era at 800-527-4421 .

Who’s eligible?

New Era doesn’t list any strict requirements for who can and can’t qualify for debt settlement. New Era doesn’t list a minimum amount of debt that you need to qualify or a minimum income or credit score.

The company, though, does provide some general guidelines:

  • New Era does say that consumers who are struggling mostly with credit card debt are the best fit for its services.
  • Those consumers who are fighting a financial hardship — caused by events such as a job loss, medical issues or a divorce — are also a better match for debt settlement.
  • Household income matters, too. As New Era says, participants will need to have money available to make payments on whatever debt settlement they reach.
  • New Era says participants in its program should be able to set aside about 1.5% of their debt amount on a monthly basis to cover the payments of a debt settlement. The company gives this example: If you owe $30,000 in unsecured debt, you should be able to devote $450 a month to pay back your new negotiated debt. If you do this, New Era says, it would take you about three years to pay back the average settlement.

Benefits and risks of New Era Debt Solutions

Benefits

Risks

There are no upfront fees involved with working with New Era Debt Solutions. You are only charged after you agree to a debt settlement deal. This is known as a performance-based fee model.

Your three-digit credit score is probably already dinged if you are looking to settle your debt. But, as New Era says, your score will fall even further if you agree to debt settlement.

Debt settlement could save you a significant amount of money. New Era says it settles clients’ debt for an average of 43.73% of what they owe.

It’s not the fastest process. New Era says it takes clients about 27 months to complete the debt settlement process.

Most people who start a program with New Era do finish. New Era says only slightly more than 18% of clients drop out before reaching a settlement.

The collection calls won’t necessarily stop. If you are stressed by the calls from collection agencies, New Era can’t promise that you won’t receive any new calls while in the program. Collection agencies don’t have to stop calling just because you are enrolled in a debt settlement program.

The odds are low that you’ll be sued once you begin the debt settlement process. New Era says only 6% of its clients experience any legal activity.

Not all debt can be settled. New Era says it can settle most forms of unsecured debt, but it can’t settle auto loans or mortgages — debt that requires collateral. New Era also can’t negotiate federal student loan debt, but it can settle private student loans that are in default.

How much does New Era Debt Solutions cost?

New Era Debt Solutions does not provide pricing information on its website. The company does, though, operate under a performance-based fee model, meaning that you are not billed until a debt settlement has been reached. New Era does not charge monthly administrative fees.

The amount New Era charges depend on several factors. The company says such factors like how much debt you owe, whether you can contribute monthly payments to pay down that debt after a settlement is reached and how long it takes for a settlement to be reached all affect how much you’ll pay.

How long does the program take?

New Era says debt settlement programs usually take three to four years from the time a client signs up. The company, though, says it acts faster, completing the debt settlement process in an average of 27.73 months.

Clients working with New Era who are struggling with debt from several creditors can expect to reach their first settlement within the first six months of starting the program, according to the company. In some instances, though, that first settlement can arrive even sooner. New Era states that some clients start receiving settlement offers from their creditors within 90 days.

It’s important to remember that no debt settlement company, including New Era, can guarantee that you’ll reach settlements with your creditors. New Era, though, does claim that most of its clients do agree to offers from their clients, saying that only 18% of its clients leave the program before settling their debts. New Era also says its clients usually pay about 43% of what they initially owed when signing up for the program. This, though, doesn’t guarantee that you will have the same success rate.

Is New Era Debt Solutions safe to use?

New Era Debt Solutions has been an accredited business with the Better Business Bureau since 2001. The bureau has zero customer complaints on file about the company.

Of the 19 reviews on the Better Business Bureau site, 18 were positive five-star reviews. Customers leaving reviews complimented the company on the regular contact and updates from New Era, the comprehensive way that employees explained the debt settlement process and the results that they received.

New Era also has no complaints listed in the Consumer Complaint Database maintained by the Consumer Financial Protection Bureau.

How do I sign up for New Era Debt Solutions?

New Era offers a free analysis of your debt. The company says it will review your basic information and send you an estimate of how much time the debt settlement process will take and how much money you might save.

To get started, you’ll have to send New Era your name, phone number, the state in which you live and how much money you owe.

You can also call New Era at 800-527-4421 to speak directly with a representative.

What to expect after signing up for New Era Debt Solutions

Once you sign up with New Era, representatives from the company will start negotiating with your creditors. How long this takes will vary, though New Era says you should start receiving your first settlement offer within six months.

Before starting the process, New Era will review your debts to determine which can be settled and which can’t. Unsecured debt — debt not tied to collateral such as a home or vehicle — can usually be settled. New Era says it can settle debts from credit cards, department store cards, signature loans, personal lines of credit and private student loans that are in default. The company, though, can’t settle debt associated with mortgages, federal student loans, car loans, credit unions and medical/hospital bills.

You will have to set up an escrow account during the process. This is an account that you pay into on a monthly basis so that when settlement offers are made, you’ll have the funds necessary to pay them. How much you deposit into the account will depend on the amount you owe and your monthly income.

Alternative methods to pay down debt

We’ll take a look at debt consolidation, debt management plans, bankruptcy and DIY debt settlement.

Debt consolidation

Part of the challenge when paying down a significant amount of debt? You have so many creditors to pay back, deciding who to pay first can become overwhelming. Debt consolidation can help with this.

In debt consolidation, a private company consolidates all your loans into one package. You then pay this company a single payment each month, and the company makes your payments on your behalf.

Pros

  • Making just one payment a month can reduce the stress of paying down your debt.
  • Your debt consolidation company might be able to reduce the interest rate you pay on your debt.

Cons

  • Your debt doesn’t go away just because you are consolidating it into one payment. You still have to pay it off.
  • You might end up paying more than what you owe when you factor in the fees that a debt consolidation provider charges.
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A Personal Loan can offer funds relatively quickly once you qualify you could have your funds within a few days to a week. A loan can be fixed for a term and rate or variable with fluctuating amount due and rate assessed, be sure to speak with your loan officer about the actual term and rate you may qualify for based on your credit history and ability to repay the loan. A personal loan can assist in paying off high-interest rate balances with one fixed term payment, so it is important that you try to obtain a fixed term and rate if your goal is to reduce your debt. Some lenders may require that you have an account with them already and for a prescribed period of time in order to qualify for better rates on their personal loan products. Lenders may charge an origination fee generally around 1% of the amount sought. Be sure to ask about all fees, costs and terms associated with each loan product. Loan amounts of $1,000 up to $50,000 are available through participating lenders; however, your state, credit history, credit score, personal financial situation, and lender underwriting criteria can impact the amount, fees, terms and rates offered. Ask your loan officer for details.

As of 28-Feb-2019, LendingTree Personal Loan consumers were seeing match rates as low as 3.99% (3.99% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected).

Debt management plan

When you sign up for a debt management plan, you’ll work closely with a credit counseling agency that will set up a schedule for you to repay your debts. The goal is to leave you with a monthly payment that you can afford and that your creditors will accept.

After you agree on a debt management plan, you’ll send money directly to your credit counseling agency each month. This agency will then make payments to your creditors. The National Foundation for Credit Counseling says it usually takes three to five years to settle your debt through a debt management plan.

Pros

  • Enrolling in a debt management program won’t affect your credit score.
  • You can focus on making just one monthly payment, eliminating the stress of dealing with several different creditors.
  • Credit counselors might be able to negotiate lower payoff amounts or interest rates on your debt.

Cons

  • Debt management usually isn’t free. Your credit counseling agency will generally charge a setup and monthly fee.
  • It can take a long time to pay off your debt.

Bankruptcy

Declaring bankruptcy can eliminate your debt, depending on the type you declare, but it will also have a devastating impact on your credit score. A Chapter 13 bankruptcy sets up a repayment schedule that allows you to pay back your debts at a pace you can afford. In a Chapter 7 bankruptcy, your unsecured debts could be eliminated. But you could also lose certain assets.

Pros

  • A bankruptcy filing could wipe away some of your biggest debts.
  • Collection agencies cannot pursue you for those debts that are discharged.

Cons

  • Bankruptcy filings will wreck your credit score, causing it to fall by 100 or more points.
  • Chapter 7 bankruptcy filings remain on your credit reports for 10 years, while Chapter 13 filings remain for seven.

DIY debt settlement

Instead of hiring a company to negotiate your debt on your behalf, you can try to settle your debt on your own. To do this, you’d have to contact companies, explain your financial situation and try to negotiate a lower payoff amount with them.
Pros

  • You won’t have to pay fees to an outside company to negotiate your debt.
  • You can tackle your outstanding debts in the order with which you feel most comfortable.

Cons

  • Negotiating debt on your own will take plenty of time.
  • You might not have the same negotiating skills possessed by private companies.

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Dan Rafter is a writer at MagnifyMoney. You can email Dan here

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The Fastest Way to Pay Off $10,000 in Credit Card Debt

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Before you read on, click here to download our FREE guide to become debt free forever!

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Updated – March 20, 2019

Digging out of credit card debt can feel frustrating, intimidating and ultimately impossible. Fortunately, it doesn’t have to be any of those things if you learn how to take control.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you racked up credit card debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately. Maybe you’d already drained your emergency fund on one piece of bad luck when misfortune struck again. Or maybe you’re struggling with a compulsive shopping problem, so paying down debt will likely result in you accumulating more until the addiction is addressed.

You also need to understand what motivates you to succeed. Do you want to pay down your credit card 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?

Here’s a couple strategies consider as you learn the best way to handle credit card debt — and pay it off quickly.

2 common credit card debt repayment strategies

These repayment strategies can help you pay off credit card debt quickly. Keep in mind, you can use these strategies even for non-credit-card debt:

  • Debt avalanche: Focus on paying off the credit card with the highest interest rate first. Then, work your way down. This strategy can save you money on interest and get you out of debt sooner.
  • Debt snowball: Pay off your smallest debts first. Doing so can motivate you to continue making payments as you climb out of debt.

You don’t necessarily need to pick the repayment strategy that gets you out of debt the fastest. After all, if your repayment strategy doesn’t keep you motivated, you may not stick to it.

Using a personal loan or balance transfer credit card

As you seek to repay your debt, you could consider a personal loan or balance transfer credit card with a lower interest rate than on your existing debt. Transferring your debt to one of these financial products could help you reduce long-term interest costs.

But you’ll first need to learn whether or not you’re eligible. Your credit score will play a big role in determining your eligibility for a personal loan or balance transfer card. Use our widget below to figure out if a personal loan or a balance transfer is the best option for you!

What’s the best option for me?

Please enter information below and we’ll provide the best option to consolidate your credit card debt!

If you have a credit score above 640, 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. In just a few minutes, with a simple online form, you can get matched with multiple lenders. People with excellent credit can see APRs below 10%. But even if your credit isn’t perfect, you might be able to find a good loan to fit your needs.

Not sure what your credit score is? Click here to learn how and where to find out. If you know your credit score needs some work but not sure of what can be done, click here.

If you have a score above 700, you could also qualify for 0% balance transfer offers. We will talk more about balance transfers below but this option is the best way to pay off credit card debt if you’re able to qualify for a 0% APR balance transfer credit card.

A credit score of less than 600 will make it difficult for you to qualify for either option. If you have a credit score less than 640, struggling to make monthly debt payments and would like to explore your options to reduce your debt by up to 50%, then please click our option below to customize a personal debt relief plan.

Custom Debt Relief Plan

Now let’s talk about the financial tools to add to your debt repayment strategy in order to dig out of the hole.

Let’s say you have $10,000 in credit card debt, and are stuck paying 18% interest on it.

You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do. But once you’ve done that, so what’s next?

Use your good credit to make banks compete and cut your rates

You could save $1,800 a year in interest and lower your monthly payments based on several of the rates available today. That means you could pay it off almost 20% faster.

Here’s how it works.

Option One: 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. You may be able to cut your rate with a long 0% intro APR. 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.

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Intro BT APR
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Balance Transfer Fee
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Regular APR
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Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
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Regular Purchase APR
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Intro BT APR
0% intro APR for 15 months on balance transfers made within 45 days of account opening. After that, a variable 14.24% APR will apply.
Balance Transfer Fee
Promotional Balance Transfers that post to your account within 45 days of account opening: Either $5 or 2% of the amount of each transfer, whichever is greater.
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Intro BT APR
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MagnifyMoney regularly surveys the market to find the best balance transfer credit cards. If you would like to see what other options exist, beyond Chase and Discover, you can start there.

promo-balancetransfer-halfIt also has tips to make sure you do a balance transfer safely. If you follow them you’ll save thousands on your debt by remaining disciplined.

You might be scared of a balance transfer, but there is no faster way to cut your interest payments than taking advantage of the best 0% or low interest deals banks are offering.

Thanks to recent laws, balance transfers aren’t as sneaky as they used to be, and friendlier for helping you cut your debt.

Sometimes the first bank you deal with won’t give you a big enough credit line to handle all your credit card debt. Maybe you’ll get a $5,000 credit line for a 0% deal, but have $10,000 in debt. That’s okay. In that case, apply for the next best balance transfer deal you see. MagnifyMoney’s list of deals makes it easy to sort them.

Banks are okay with you shopping around for more than one deal.

Option Two: Personal Loan

If you never want to see another credit card again, you should consider a personal loan. You can get prequalified at multiple lenders without hurting your credit score, and find the best deal to pay off your debt faster.

Personal loan interest rates are often about 10-20%, but can sometimes be as low as 5-6% if you have very good credit.

Moving from 18% interest on a credit card to 10% on a personal loan is a good deal for you. You’ll also get one set monthly payment, and pay off the whole thing in 3 to 5 years.

Sometimes this may mean a higher monthly payment than you’re used to, but you’re better off putting your cash toward a higher payment with a lower rate.

And you’ll get out of debt months or years faster by leaving more money to pay down the debt itself. If you want to shop for a personal loan, we recommend starting at LendingTree. With a single online form, dozens of lenders will compete for your business. Only a soft credit pull is completed, so your credit score will not be harmed. People with excellent scores can see low APRs (sometimes below 6%). And people with less than perfect scores still have a good chance of finding a lender to approve them.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Are Balance Transfers the Best Way to Pay Off Debt?

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When you’re buried under a pile of debt, you’ll need to go beyond making the minimum payments if you hope to get debt-free as quickly as possible. And with interest rates on an upward swing, it may not be something you can afford to ignore.

This is where balance transfer credit cards come into play. Once you understand how they work, they can be a powerful tool that lets you temporarily pause your interest payments — and chip away at your principal balances faster.

MagnifyMoney tapped the experts to unpack everything you need to know about balance transfers. Here’s how to master the ins and outs of one of the most effective debt repayment options available.

What is a balance transfer?

It’s all in the name. A balance transfer involves taking one or more credit card balances and transferring them to a different card that has a lower interest rate. The ideal situation is to roll everything over to a card that has a 0% APR promotional period. This essentially eliminates the interest for a set period, giving you a chance to catch your breath and, if all goes according to plan, pay off the balance before the interest kicks in.

To pull off a balance transfer, you can either open a new low- or no-interest credit card, or look to your existing cards that you’ve already paid off to see if there are any deals to be had. According to David Metzger, a Chicago-based certified financial planner and founder of Onyx Wealth Management, it isn’t uncommon to find 0% interest rate promotions on your existing cards.

“If you’ve got multiple cards, chances are you get offers like that all the time,” he said.

If not, don’t be afraid to reach out to your credit card companies to see if they have any deals up for grabs. If they don’t, or you don’t have the credit capacity on your existing cards, you can shop online for a balance transfer card.

As for the promotional introductory period, it varies from offer to offer, with the best rates and terms generally going to those who’ve got excellent credit. Those with a minimum credit score of 680 can expect transfer periods that last anywhere from 12 to 21 months. Keep in mind that some offers tack on a balance transfer fee to the tune of 0% to 4%, so it pays to read the fine print.

How balance transfers can save you money

Temporarily eliminating your interest rate can translate to pretty significant savings. Let’s say you have the following open balances, and you pay $100 per month on each:

  • $1,000 with 18.00% APR
  • $2,000 with 16.00% APR
  • $800 with 20.00% APR

If you stay on this path, you’ll shell out $500 in interest and get out of debt in 24 months. But a balance transfer with 0% APR for 15 months will keep that $500 in your pocket. Your monthly payment won’t change, and you’ll also pay off the balance nine months faster. From a numbers-and-sense perspective, it’s a no-brainer.

“You can save a ridiculous amount in interest payments, but the name of the game is to more or less come close to paying the balance off completely before that transition over to that higher interest rate,” Lucas Casarez, a Fort Collins, Colo.-based certified financial planner and founder of Level Up Financial Planning, told MagnifyMoney.

Applying for a balance transfer credit card

As Metzger mentioned, turn first to any existing credit cards that can absorb some new debt. Are there any balance transfer offers available? If not, the best place to search and compare balance transfer offers is online. According to Casarez, the following factors play the biggest role in the kinds of deals for which you’ll be eligible:

  • A good credit score: You won’t qualify for much if your credit score is below 680. At the time of this writing, the longest promo periods with 0% interest were reserved for this bunch. Why? A lower credit score is a red flag to credit card companies that you may be a risky borrower.
  • Reliable income: Your credit score doesn’t stand alone. “You could have the best credit score in the world, but lenders still want to know that you have the ability to pay your bill,” Casarez said.

He adds that folks in retirement, for example, may have a tougher time qualifying for a worthwhile balance transfer since their money may come more from retirement accounts rather than Social Security or pensions. Casarez does clarify, however, that credit card companies typically want to approve you.

“These banks make a lot of money the longer that your current balance is at a higher interest rate,” he said.

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Discover it® Balance Transfer

Regular APR
14.24% - 25.24% Variable
Intro Purchase APR
0% for 6 months
Intro BT APR
0% for 18 months
Annual fee
$0
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Balance Transfer Fee
3%
Credit required
good-credit
Excellent/Good

Barclaycard Ring® Mastercard®

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Barclaycard Ring® Mastercard®

Annual fee
$0
Regular Purchase APR
14.24% Variable
Intro BT APR
0% intro APR for 15 months on balance transfers made within 45 days of account opening. After that, a variable 14.24% APR will apply.
Balance Transfer Fee
Promotional Balance Transfers that post to your account within 45 days of account opening: Either $5 or 2% of the amount of each transfer, whichever is greater.
Credit required
good-credit
Excellent/Good

Wells Fargo Platinum Visa Card

The information related to Wells Fargo Platinum Visa Card has been collected by MagnifyMoney and has not been reviewed or provided by the issuer of this card prior to publication.

Wells Fargo Platinum Visa Card

Intro Purchase APR
0% for 18 months
Intro BT APR
0% for 18 months on qualifying balance transfers
Regular Purchase APR
13.74%-27.24% (Variable)
Annual fee
$0
Credit required
good-credit
Excellent/Good

3 questions to ask before transferring your debt

If you’re looking to save money and get out of debt faster, balance transfers are a powerful weapon to have in your arsenal — if you know how to use them wisely. Here’s what to consider before giving it a go.

1. Do you understand why you’re in debt?

This strategy won’t work if you don’t get to the root of why you’re in debt to begin with. What kinds of purchases make up the bulk of your existing credit card statements? Whether they’re living expenses, splurges or surprise pop-up bills, it’s time to revisit your budget to prevent falling into the same patterns again. After your balance transfer is complete, seeing $0 balances on your old credit cards can create serious temptation.

“If you don’t have a plan, balance transfers may be something that allow you to spend even more money, so it could put you further into the hole,” Casarez said. “It’s like a hot potato you’re passing around, but there’s going to come a day when you have to pay up.”

Having emergency savings on hand provides an additional safety net because you won’t need a credit card to see you through your next unexpected bill. Our insiders recommend building a $1,000 mini-emergency fund while you’re paying off debt.

2. Can you pay off your debt before the introductory period ends?

Once your budget and emergency fund are in shape, it’s time to shop around online for balance transfer offers. Ones with the lowest transfer fees and longest 0% introductory periods are the best, but here’s the catch: This strategy only makes sense if you can pay off the balance before that period ends, at which point you’ll be slammed with interest charges on the remaining balance.

Standard interest rates after the introductory promo period ends are generally higher than other credit cards. And if you miss a payment, the credit card company may cancel your promo period.

3. Are you OK with taking a short-term credit hit?

Opening a new balance transfer card requires a hard credit inquiry, which will result in a short-term dip in your credit score. Your score may also take a small hit if the transfer itself uses up more than 30% of your new credit line. (How much you owe accounts for 30% of your FICO score.) But Metzger said it may be worth it if you’re ultimately eliminating high-interest debt faster.

“Your score will improve much faster than it would have had you not engaged in the strategy,” he said. “You take a small step backward for a huge step forward, if you’ve got the discipline to do it.”

Metzger does suggest using caution with balance transfers if you plan on financing a big purchase, such as a mortgage or car, within the next month or two. Depending on your financial health, slight fluctuations in your credit score could prevent you from getting the best interest rates on these purchases.

3 alternatives to a balance transfer

If a balance transfer isn’t in the cards for you right now, there are still plenty of viable ways to get out of debt as quickly as possible. Here are a few tried-and-true debt repayment methods you can put to use today.

1. Debt snowball method

The debt snowball approach prioritizes your lowest balance first, regardless of your interest rates. You make the minimum payments on all your debts while hitting the lowest balance the hardest with any extra income you can spare. Once it’s paid off, you take whatever you were spending there and roll it over to the next lowest balance. Keep on chugging along until all your balances are paid off.

“The nice thing about the debt snowball, and the reason that it tends to be the most effective way, is that you start to have those wins a lot faster when you’re focusing on those smaller balances,” Casarez said.

“You start to build up some momentum and confidence,” he added. “As you do that, you start to get a little bit more swagger and feel like you’re actually making progress and have more control over your financial situation than you thought.”

2. Debt avalanche method

This strategy puts your highest-interest balance above all others. When you compare it to the debt snowball method, it’s the fastest and cheapest way to get the job done, which is why Metzger said it makes the most sense.

“With that being said, people are quirky,” he added. “If paying down the lowest balance and snowballing it that way works for you, then by all means do it. The outcome is far more important than the path you take to get there.”

3. Debt Consolidation loan

Another way to tackle your debt is to consolidate it using a personal loan. Once you receive the loan amount, you use the funds to pay off all your debt, at which point you’ll have one new balance and monthly payment. This strategy is ideal for those who can lock down a lower interest rate. What’s more, personal loans often have fixed rates, monthly payments and repayment timelines, so it makes budgeting a whole lot easier.

And since it’s a lump-sum installment loan — not a revolving credit line in which you can charge and pay off as you go — using it to eliminate credit card debt should boost your credit score because you’re effectively using less available credit. Some personal loans do come with an origination fee, typically between 0% and 6%, so do the math to see if it’s the right debt consolidation method for you.

When shopping for a debt consolidation loan, it’s best to compare your option to make sure you get the one with the lowest interest rate. LendingTree, the parent company to MagnifyMoney, allows you to compare up to five lenders without affecting your credit score. Use our table below to get the best results!



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Which is the best way to pay off debt?

It all depends on your situation. If you’ve got a solid credit score and qualify for attractive balance transfer offers, it’s worth exploring — as long as you don’t charge new debt and you’ve got a plan in place for paying off the balance before the introductory period ends. When done right, balance transfers are great shortcuts that could save you a significant amount of time and money in the long run.

The debt snowball and avalanche methods are worthwhile alternatives for those who prefer to get out of debt the old-fashioned way. Meanwhile, a debt consolidation loan could pave the way for a locked-in lower interest rate. The main takeaway here is that you have multiple debt repayment options at your fingertips. They’re all, as the old saying goes, “Different paths up the same mountain.”

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Marianne Hayes
Marianne Hayes |

Marianne Hayes is a writer at MagnifyMoney. You can email Marianne here

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