4 Easy Ways to Reduce Debt
December 7, 2020
Nearly half of U.S. adults currently have credit card debt, according to a report from CreditCards.com. It’s estimated that 23% of credit card users have more credit card debt as a direct result of the Covid-19 pandemic.
Add to that recent holiday spending, and chances are, you can use some helpful tips on how to reduce debt. Here are some ways you can ease debt this year:
Transfer debt to a lower-interest card. By bringing high-interest balances to one, lower-interest-rate card, you can cut monthly costs. An RCU Visa® Platinum card offers a low rate, with no balance-transfer fee.* To get started, visit redwoodcu.org/transfer.
Pay down debt. In her RCU webinar, Jean Chatzky recommended two ways to pay down debt. The first is the “debt snowball” where you pay off your debts in order of the smallest to the largest. In doing that, you get a psychological win from clearing the smallest credit card. The second is the “debt avalanche,” which says you go after the highest interest rate first, and then make minimum payments on the rest. And then you work your way down to the lowest interest rate. The avalanche is Jean’s preferred method because numerically it’s cheaper and faster, and she wants to see people out of debt as soon as possible. Choose the method that best suits your style, and stick with it.
Stop creating more debt. This alone won’t get you out of debt, but at least your debt won’t get worse. Reduce the temptation to buy things by cutting up your credit cards or even freezing your credit for a period of time.
Build an emergency fund. Saving money instead of paying down debt may seem counterintuitive but an emergency fund can actually keep you from creating more debt. These savings give you a safety net you can use when an emergency arises, so you don’t have to reach for your credit card. Jean Chatzky recommends three to six months’ worth of emergency savings—three months for a two-income family and six months for a single income family.
To learn about managing debt, saving, spending, and more, visit our Financial Wellness Center. There are articles, videos, podcasts, and other helpful resources. We’re here to support you every step of the way!
* Rates effective 01/01/2021. All rates, terms and special offers subject to change. Certain restrictions apply. For cash advances at a non-RCU location, the greater of 2% of the advance or $20 will be charged.
PPP Forgiveness Application Deadline
Congress passed The Economic Aid Act which changed the deferment period from 6 months post covered period to 10 months post covered period. For example, if your covered period ended June 30, 2021, under the new guidelines the earliest your first loan payment wouldn’t be due until April 2022, and you have until then to request forgiveness. Please use the following calculation to help you identify when your forgiveness will be due:
- PPP borrowers may select a covered period anywhere from 8 weeks to 24 weeks.
- RCU is automatically calculating your loan due date based on a 24-week covered period, if you intend on using a shorter covered period please inform us immediately as this will impact your due date.
- Your correct deadline will be reflected in your online banking account.
If all or part of your PPP loan is not forgiven, your first loan payment will be due the first of the following month after a decision is made by the SBA.
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