Factors to Consider When Transferring a Credit Card Balance
Learn which types of debt can positively or negatively impact your financial health.
Many of us are taught that debt of any kind should be avoided, but not all debt is created equal. Understanding how different types of debt can impact you financially will help you make better decisions when it comes to managing your money and building slack. Here we break down how different types of debt can impact your financial goals.
Debt that helps you increase your earning potential
Mortgages
- Home equity: As you pay down your mortgage, you build home equity – the difference between your home’s value and the remaining loan balance. The equity in your home can be tapped into through a home equity loan or a line of credit.
- No PMI loans: Some loans like the Slack Builder Home Loan from Credit Human can qualify members for no downpayment and no PMI (Private Mortgage Insurance), allowing that money to go towards the principal balance and build equity faster.
- Property appreciation: Over time, real estate tends to appreciate. Owning a home can lead to substantial gains when you sell it.
- Tax benefits: In many cases, mortgage interest payments are tax-deductible. This reduces your taxable income, potentially leaving you with more money to invest or save.
Student loans
- Higher earnings: Graduates with a bachelor’s degree earn more on average than those without. Advanced degrees can offer even more earning potential.
- Career opportunities: Education opens doors to more job opportunities and career growth.
Car loans
- Credit building: Consistently making on-time car loan payments can positively impact your credit score, helping you build a stronger credit history.
- Job mobility: You can explore job opportunities beyond your immediate vicinity, potentially leading to better career prospects.
Debt that does not increase your earning potential
- Payday loans: These short-term, high-interest loans often trap borrowers in a cycle of debt. Learn more about the dangers of short-term financing.
- High-interest credit cards: Making only the minimum payment on high-interest credit cards prolongs debt repayment and increases interest costs.
- Medical loans: While it may be unavoidable, unsecured medical loans can come with steep rates. Explore options for payment plans directly with the medical facility’s billing department or a Health Savings Account with your employer.
Tackling harmful debt
The good news is there are options that will help make harmful debt manageable and allow you to progress toward your financial goals.
- Balance transfer card: One option is to transfer balances to a balance transfer card. These cards let you transfer the balance of one credit card or loan to a credit card with a lower interest rate to help you pay off your debt faster. A Credit Human Balance Transfer lets you do that with no balance transfer fee and a low fixed rate.
- Debt consolidation loan: Debt consolidation loans can help ease financial stress by providing a manageable way to handle multiple debts. It doesn’t erase your debt, but it can help lower monthly payments with a single lower interest rate and simplify how many monthly payments you make.
- Credit counseling: Keep in mind consolidation doesn’t address spending habits. It may be necessary to meet with a financial counselor to get a better understanding of how the debt grew in the first place and what financial habits you can change or implement to help avoid unmanageable debt in the future.
Keep in mind consolidation doesn’t address spending habits. It may be necessary to meet with a financial counselor to get a better understanding of how the debt grew in the first place and what financial habits you can change or implement to help avoid unmanageable debt in the future.
