Staying Out of Debt
Learn tips for how to stay out of debt, as well as topics like debt consolidation, in this free lesson.
Tips for staying out of debt
Consider taking one or more of the following steps to help pay off debt or stay out of debt:
- Stop paying high interest rates. Apply for a card with a lower rate, but make sure you understand the credit card agreement before signing it.
- Consolidate credit card debt. Transfer your largest high-rate balances to a card with a low rate and work to pay it down.
- If you have savings, consider using some of it to pay off debt. It may sound drastic, but it makes sense if the money in your savings account is only earning interest of 3.5 percent, while the price of carrying debt is 15 percent or higher.
- Consider consolidating if you have sizable student loans. Under the federal Direct Consolidation Loans program, you can combine multiple federal education loans into a new loan. Benefits include no charges for consolidation, a choice of different payment plans, and dealing with one lender and one monthly payment. To find out if you're eligible for this program, check out the Federal Student Aid's Loan Consolidation page.