Consolidating Your Debt

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Educators are paying hundreds of dollars in interest each year – needlessly! By consolidating credit card balances, loans and lines of credit, you can pay down debt faster with one easy monthly payment – often at a lower interest rate. Two options are:

  • Transfer balances to a lower-rate card or loan. If you transfer from a high-interest-rate credit card to a card with a low fixed rate or a low-rate personal loan, you’ll reduce the amount you pay in interest charges. For example, if you have a balance of $3,000 on your credit card and intend to pay it off in two years, transferring to a card with a rate just 2% less than your current rate could save you $72 in interest over the term of the loan.

Learn more about credit card programs through CTA, including low rates and exclusive member benefits.

  • Take out a home equity loan. A home equity loan may offer a lower rate than a credit card and may allow you to deduct the interest you pay.* Contact your bank or credit union for more information about home equity loans and lines of credit. CTA's two endorsed credit unions offer members competitively priced home equity loans and lines of credit. For more information, visit Provident Credit Union.

* Consult your tax advisor for more information.

How a Debt Consolidation Home Equity Loan Could Save You Money

The following chart shows how a hypothetical educator who has $15,000 in credit card debt could lower his or her monthly payments by $125 and save about $7,682 on total interest paid by consolidating debt into a home equity loan. Note that you may incur closing costs that will reduce the amount of your total savings.

  Amount Owed APR* Monthly Payment Interest Total Paid Over 60-month Term
Current Debt:
Big-box electronics store $6,000 20.99%** $162 $3,816
National department store $5,000 23.99%** $144 $3,691
National discount store $4,000 22.99%** $113 $2,804
  $15,000 $419 $10,311  
Consolidated Debt:
Home Equity Loan $15,000 6.548%*** $294 $2,629

* APR = annual percentage rate. Numbers are estimated for the life of the loan assuming equal monthly payments. All loans are assumed to be paid off in five years.
** Rates effective July 23,2009, via Internet search of well-known retailers, and are subject to change.
*** Average credit union home equity loan interest rate as of July 23, 2009, per Bankrate.com. Rates are subject to change and all normal credit restrictions apply.