Tallahassee debt consolidation represents one of the many debt reduction strategies available to residents. If you are buried in consumer debt, it can be hard to figure out a way out of debt. Yet, consolidation offers an effective DIY solution to paying off your unsecured debts. Read on to learn more about the debt situation in Tallahassee, Florida, and how debt consolidation can be beneficial.
Debt Situation in Tallahassee, FL
Before the COVID-19 pandemic struck, the average credit card debt in Florida was consistently higher than the national average – a testament to the residents’ reliance on credit. As of the end of Q4 2021, the average household credit card debt in Tallahassee was $11,378 – notably higher than the national average ($8,590).
While spending significantly dropped during the lockdown, the high unemployment rate triggered by the pandemic meant that most residents of the Sunshine State could not pay down their outstanding debts. Even as delinquency rates slowly drop nationwide, Floridians still have the 8th highest delinquency rate on mortgage payments.
Florida’s median income could also point to the debt struggles of its residents. At $55,660, it is only better than thirteen states in the country. If these numbers and trends are anything to go by, Floridians are doing their best to manage debt but have difficulty getting out from under it.
Tallahassee Debt Consolidation for Debt Management
Consolidating debt is one of the ways you can lower and eventually eliminate your current debt. While it involves taking out a loan to clear your outstanding high-interest, debt consolidation in Tallahassee could help you get out of debt while saving money on interest.
How Debt Consolidation Works
Unlike other debt management strategies, debt consolidation is best suited for those who have significant amounts of high-interest unsecured debts. It involves using a lower-interest loan to pay off all your outstanding unsecured debts and then paying down the loan over a given period.
Some ways to consolidate debt in Tallahassee are taking out a personal loan and using a balance transfer credit card (for credit card debt). Yet, you should consider your credit score before embarking on this process.
While your credit score is affected by a mix of factors, making timely payments on your outstanding debt is one of them. A good credit score ensures that you qualify for better loan terms and a potentially lower interest rate.
As of 2021, the average FICO credit score in Florida was 706 – just eight points below the national average. Any credit score above 700 is considered good, meaning most residents can qualify for favorable consolidation loans in Tallahassee, Florida.
Personal Loans for Debt Consolidation
Personal loans are crucial to Tallahassee debt consolidation as they give you access to a lump sum that you can use to pay off your unsecured debts. A personal loan is a great option if you are struggling with insurmountable debt that would probably take years to be paid off.
Most personal loans have a repayment period of two to seven years, but you have to repay your loan before this period elapses. The interest rate on a personal loan depends on your credit score, with typical rates ranging from 6 to 36 percent.
While personal loans are available in huge amounts (up to $100,000), most lenders will require you to have strong credit and a significantly low debt to income ratio to qualify for the large loans.
For debt consolidation Tallahassee, FL to make sense, ensure that you get a personal loan with a lower interest rate than that of your outstanding debt.
Other Loans for Debt Consolidation
Personal loans are available through various lenders, including banks, credit unions, and online lenders. You can qualify for one without collateral, provided you have a good credit score. But are there other financing options when it comes to Tallahassee FL debt consolidation?
Home Equity Loans
Like personal loans, home equity loans are lump-sum, fixed-rate financing options that can help you pay off high-interest debt. However, these are exclusive to homeowners with significant usable equity in their homes. As such, you may not qualify for this loan if you are a new homeowner.
Home equity loans can give you access to large sums as most lenders may let you borrow up to 80 percent of your equity. Perhaps the most appealing side to home equity loans is their low interest rates, which barely exceed 6 percent.
These loans come with tax incentives which could mean significant savings over the life of the loan. While these benefits may accrue, you risk losing your home if you default on payment.
Home Equity Lines of Credit (HELOC)
Unlike the typical Tallahassee FL consolidation loans, HELOCs provide a line of credit from which you can draw and pay off your unsecured debt. These are also secured against the equity in your home, which means they give you access to huge sums for debt payment.
HELOCs are particularly useful for Tallahassee debt consolidation if you are unsure about the amount you need for debt payment. With a HELOC, you can borrow up to a given limit and repay only the amount you use.
Balance Transfer Credit Cards
Tallahassee residents love credit cards – the average credit cardholder in the city carries four credit cards. Juggling multiple credit cards with balances could be overwhelming, especially if you max out your credit cards.
If you still have a good credit score, you can move your outstanding bills to a zero percent introductory interest credit card. You can pay off your credit card debt without worrying about interest, provided you do it before the introductory period elapses.
However, balance transfers come with fees. You should consider how much fees you will pay; it helps determine whether other Tallahassee debt consolidation options are better suited to your situation.
Bottom Line
The best debt consolidation option depends on your financial position. Factors such as your income, credit, and equity in your home could define your options for consolidation. Before you embark on Tallahassee debt consolidation, ensure that you have enough income to sustain payments. Otherwise, you may be stuck in the debt loop for years.