Ready to Chip Away at Your Debt?

Know where to start first

If you ask 100 savers what their formula is for successfully saving, they will tell you the same thing. It’s about avoiding debt. It seems simple enough, yet managing debt is one of the biggest challenges many Americans face.

The truth is that many people would be surprised to learn that reducing debt is easier than they think. Depending on the types of debt you have, you may be able to save hundreds of extra dollars a year by paying down debt and consolidating higher-interest debt.

So where do you begin?

Well, like any financial assessment, you will need to develop a plan. You can start by identifying the types of debt you have. This may include credit card debt, department store charge card debt and other loans, such as personal loans.

Once you have identified your debt, take a look at the interest rates you are paying. What’s the interest rate on purchases of your credit cards and loans? Write down your outstanding balance for the types of debt you have.

The next step is to organize your debt by interest rate. Experts agree that the best plan for consolidating debt is to start attacking the debt with the highest annual percentage rate first. So if you have a $5,000 loan at 5% interest and a $2,000 credit card at 18% interest, pay off the credit card first. One of the biggest mistakes people make is trying to pay down the loan with the highest balance first.

When you have identified the debt with the highest interest rate, make an aggressive plan to attack it. That could mean doubling or tripling the minimum monthly payment amount or possibly making extra payments whenever you have extra cash on hand. The rule is pretty simple: The higher your payment, the more you will reduce interest charges, as the extra money you pay will go right toward the principal. UCCU offers free debt elimination software from Simple Joe to help you make a debt elimination plan.  You can download the file by visiting

Seek out lower-interest alternatives

Another way to reduce your debt is to try to consolidate your debt into a lower-interest vehicle. You can accomplish this by finding a credit card with a special introductory rate on balance transfers and then transferring the higher-interest debt to it. Another option many people take is to roll their debt into a lower-rate home equity loan. That would allow you to not only lower your interest rate but also take advantage of potential tax savings available with home equity credit.

Do what works best for you

If you prefer to pay off credit with higher loan balances versus higher interest rates, that’s fine too. The important thing is that you make a consistent effort to pay down debt. Again, always try to pay more than the minimum balance. With services like UCCU’s online banking, you can arrange to have automatic payments of the frequency and amount of your choice paid directly toward your credit card. These simple steps will go a long way toward making a dent in your debt and getting you back on course.

Once you pay off your debt, remember to use your credit wisely and not charge anything you cannot afford. Otherwise you will end up right back where you started.

Contact us at 1-800-223-UCCU (8228) or visit us at any of our eighteen convenient branches to find out how we can help you with home equity loans, lines of credit and financial planning.

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