NEW YORK, March 14, 2023 (Newswire.com) - Credello: Studies show that Millennials often have debt. The average amount is almost $30K. Some have more, while others have less, but it's a sobering number.
There are actions you can take if you're a Millennial and you're carrying this much debt. We'll talk about some strategies right now.
Get a Personal Loan
Many Millennials are paying for things with credit cards. This is tempting, but it can backfire. Credit cards can have interest rates close to 35%.
If you have several outstanding debts, how much of a personal loan can I get should probably be the question you're asking. If you approach a bank or credit union and get a personal loan, you can use that money to pay off your debts.
Why Are Personal Loans So Attractive?
Getting a bank or credit union loan simplifies your life. If you do this, you only have one loan to repay, rather than owing several different credit card companies and other entities.
Also, when you get a personal loan, you're liable to pay much less in interest when you're repaying it than you would if you're paying off outstanding credit card debt. We mentioned that credit cards can charge as much as 35% in interest, but you usually pay far less with personal loans.
You can sometimes get interest rates of 8% or lower with personal loans if you have excellent credit. If your score isn't the best, you might still get an interest rate of 15% or lower. That's much better than the 30-35% you'd likely pay with credit cards.
What Else Can You Do?
As a Millennial dealing with debt, you'll know a set amount you must pay each month once you have a personal loan. The next step toward financial responsibility is to pay all your other bills on time.
With a personal loan in place, you owe money to one entity as a set payment amount each month. You will also have monthly expenses such as rent, utilities, groceries, and car payments.
If you set up a household budget and stick to it, you can stay on top of those other bills while you pay off the personal loan. You can create a spreadsheet showing how much money you're bringing in and the cost of your expenses.
Improve Your Credit Score
When you make payments on your personal loan and on-time payments of your bills, that will gradually improve your credit score if it isn't so great. Making on-time payments raises your VantageScore and FICO scores. That's always to your benefit.
You should not open any new credit card accounts if you can avoid it. That way, you won't be tempted to use one of your new cards and spend beyond your means.
You can also set up autopay for your bills. You can set up a service that monitors when you pay your bills and reports that to the major credit bureaus.
You Can Chip Away at Your Debt
If you're a Millennial with tens of thousands of dollars in debt, you can consolidate the entities to which you owe money by getting a personal loan from a reputable lending entity. You can use that money to pay off your credit cards and other debt.
You'll likely pay far less interest on your personal loan than credit card interest. You'll have one entity to pay each month, and you'll know the amount that's due.
In addition, you can budget by setting up a spreadsheet and calculating how to spend the money you have coming in on your monthly bills. If you don't miss any payments, you'll stay on top of those bills, and you'll raise your credit score.
You should have excellent credit by the time you've paid off the personal loan. You're now in a position to keep your credit score high and avoid getting deep into debt through frivolous spending habits.
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Original Source: The Average Millennial Has Nearly $30K in Debt. Here Is What They Should Do.