by Vince Liuzzi
Executive Vice President and Chief Banking Officer, DNB First
With spring just around the corner and summer not far behind, many people are focused on getting into shape. While it’s always important to focus on our physical health, it’s equally important to focus on our financial health. And now is the perfect time for those carrying “extra weight” from debt to shape up.
It’s estimated that in 2015, the average amount of credit card debt in America was more than $16,000 per household. And, according to data from the Federal Reserve, total credit card debt in America as of August 2015 was $918.5 billion.
A smart way to shed added interest
So if you’re carrying the weight of extra debt, what can you do? If you’re a homeowner, you might consider one possible solution – a home equity loan or line. With competitive rates, potential tax savings (be sure to consult your tax advisor), and the flexibility to borrow money for any purpose, a home equity line or loan can be a great way to consolidate credit card and other high-interest debt.
Keep in mind, however, that if you decide to consolidate credit card debt with a home equity loan or line, you’ll be securing that debt with a second mortgage on your home, so be sure to make all your payments in a timely manner.
Put your debt situation to the test
Before you make any decisions on home equity debt consolidation, you should analyze your current debt situation to see how much you’re paying in interest. You’ll want to consider the following questions:
Do you have enough equity in your home?
How much will you save on interest?
Will consolidating debt improve your cash flow? Or help you pay off the debt more quickly?
Will you be disciplined enough not to run up your credit card balances again if you pay them off?
We can help you determine if home equity borrowing is a smart way for you to trim down your excess debt. As for the other “weight” you may be carrying, the forecast calls for beautiful running and cycling weather in the weeks ahead!