Government Grants To Pay Off Personal Debt
When a low-income person has many expenditures but he is not capable to handle all the expenditures in his low income, he thinks about lending some money. But lending the money is means that they have to return the money and with the interest, which is not possible for them. And in the end, they look for grants from the government. If there is any grant that can help them financially to pay off debt. But people also doubt in their mind about those government grants that they need to pay back these debt relief grants by the government?
So, we tell you, that like the other loans or debts, you do not need to pay back the grant amount to the government. Because the government does not expect to take it back from you, they just want to help you in your tough time. So, it is a powerful tool for people who are facing life difficulties which are related to finance. They can use this financial grant from the government without any worry of payback and fulfill their financial needs.
In this article, you will get information about the various personal loans for the people which are offered by the government. The most interesting thing that the individuals do not need to pay it back. So, continue with the article and get information about various personal loans which are helpful for you.
Option : Do A Credit Card Balance Transfer So You Can Pay Off The Debt Interest
This option only works if you have good credit excellent credit is better. Balance transfer credit cards offer 0% APR on balance transfers when you open the account. An excellent credit score means you qualify for the longest 0% APR introductory period possible. Some cards have promotions that run up to 18 or 24 months. That gives you up to two years to pay off your debt interest-free.
Be Aware of Fees: Balance transfers always involve transfer fees, even when you have 0% APR. You pay a fee for every balance you transfer anywhere from $3 to 3 percent.
How It Works:
- You open a balance transfer credit, qualifying for rates and terms based on your credit score
- Then you transfer the balances from your existing accounts to the new account with fees added.
- You have a set number of months to pay off your debt with no interest charges.
Make sure to calculate carefully to ensure you eliminate the balance before the clock runs out. If you can, this will give you the biggest cost savings, because there are no interest charges. Otherwise, the interest rate on your debt could be even higher than it was originally.
Opt For A 0% Apr Balance Transfer Credit Card
Who its best for: Borrowers with excellent credit who can pay off their balance in six to 18 months
If you have a balance on your cards, a popular credit card debt consolidation strategy is to apply for a balance transfer credit card. This approach involves transferring your high-interest debt to a new credit card that offers a lower introductory APR for a limited time. By transferring your balance, you could save money on interest charges.
- No interest accrues during the promotional period
- Quick and easy application process
During the promotional periodwhich can last between six and 18 monthsyour card will have a lower APR. Many cards offer 0% APR during the introductory period, so youll have several months to pay off the balance without interest accruing.
With a balance transfer card, you can apply online and receive a decision within minutes. You have to contact the new card issuer to transfer your balance, but the process typically takes just a few days to complete.
- Regular APR applies once the promotional offer ends
- Good to excellent credit is required
Transferring your balance isnt free. Most charge balance transfer fees when you move a balance over to a new card. These fees are usually 3% to 5% of the transferred amount, and the card issuer adds the fee to your balance. For example, if you transferred over $5,589the average credit card balanceto a new card, youd have to pay between $157 and $261 in balance transfer fees.
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Negative Impact On Credit Score
Debt can weigh heavy on your mind and its not always easy to make a decision on which approach you want to take. Several options are available that are less risky than credit card debt settlement whether that means working with a debt settlement company or trying your hand at DIY debt settlement negotiations. Below are four alternatives to debt settlement.
Low Income Financial Assistance Programs For Debt Relief
Many times, when we are going through difficulties in our life, we just want to get help anyhow and we dont think that the help which is given to us is useful or not for us, or it can be a scam. Same as, many times most of the non-profit organizations come forward to help the people and also people think that getting help is the best source, instead of the government. But when you decide to take help from a non-profit organization then you need to read the small print. Because most of the time these non-profit organizations come with schemes that are not helping the people, but they do scam with them and people have to face more difficulties. Thats why it is most important to know about their schemes and investigate them in advance, so later you dont have to face any problem.
When you are seeking government grants to get out of debt, you will find a list of the government grants That are provided by them, and the amount will lie between $5 to $80 anywhere. But you find that in the end, all these grants are the same, and just are sold by different companies. So, first confirm which grant you need and which company is provided it to you, so that you cannot apply for the same grant with any other company.
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Handling Credit Card Debt While Unemployed
A strange thing happened when the COVID-19 economic shutdown hit the United States — millions of Americans did NOT go further into credit card debt.
A familiar thing is happening now that the economy is recovering. Millions of Americans are going further into credit card debt.
Sadly, there is no vaccine for credit card debt. You need to protect yourself, and the first step is to recognize the enemy.
When money is tight, its tempting to have a credit card company throw you a lifeline. But its really more like tossing an anchor to a drowning man or woman.
The culprit is interest rates, which averaged 16.3% in June, according to the Federal Reserve. Thats five times more than a typical mortgage rate these days. And most credit card companies compound interest daily, meaning more interest is added to the principal every 24 hours.
You can end up paying as much in interest as you did for the item you purchased. That treadmill seemed to have largely gone out, but now its back.
Whats going on?
More From Life Changes:
If you are struggling to make minimum payments on credit card balances, there are options to help you reduce the amount you owe and/or minimize the amount of interest you pay on the debt.
There is no silver bullet for high debt, however. The solution begins with changing your own behavior.
“The only long-term solution is to fix your spending habits,” said Summer Red, a financial counselor and senior education manager at the Association for Financial Counseling and Planning Education. “Nothing will be successful unless you stick to a reduced spending plan.
“You must get your spending below your income level.”
A $10,000 credit card balance with a 20% interest rate costs you $167 per month and that only ensures that your balance won’t grow larger. To begin paying down the debt balance, you’ll have to do more.
There are two key aspects to getting control of your spending not using your credit cards and drafting a sustainable budget that includes paying down card balances.
On the first front, Red suggests people cut up all but one of their credit cards. Don’t cancel the accounts because your credit score will suffer
If you still wrestle with the itch to use your card, put it in the freezer. “It takes about three hours for a credit card to thaw and be ready to use,” said Red. “That gives you time to think about your purchases.” Only use the card for purchases you’re able to pay off at the end of the month.
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Do I Qualify For Low Income Government Assistance
The short answer: that depends.
The income figures in the above charts are based on poverty guidelines determined by the U.S. Census Bureau and updated yearly, based on cost-of-living changes. Federal and state-administered programs use those guidelines depending on the program and region you live in.
If credit card debt is your biggest household challenge and it is for many American, regardless of income you wont find any government debt relief programs.
The good news is, there is no shortage of help on other fronts. Federal government debt relief programs in the form of financial help include long-time programs such as Supplemental Nutrition Assistance Program , Temporary Assistance for Needy Families , Medicaid, Childrens Health Insurance Program , unemployment benefits and more.
Most federal financial help for people with low incomes is administered through HHS and the U.S. Department of Housing and Urban Development . Resources and information can be found at the state level through your states health and human services department. Local town or city government in some states, also have resources or information for things like paying emergency energy bills, or a break on local property taxes for people in a financial crisis.
There is an application process for HUD benefits and housing programs, which includes proof of income. Your states human services department will have information on its webpage about how to apply.
Save A $1000 Emergency Fund
If getting rid of those credit cards freaks you out because you use them for emergencies, then its time to come up with a new plan. Borrowing money for emergencies only leads to more disaster. Its time to get yourself an emergency fund.
First step? Save $1,000 as fast as you can. Leave it in your savings account as a buffer between you and those life happens moments. And while no one likes to pay for emergencies, using your own money means you wont have to pay interest on that brand-new A/C unit.
I know $1,000 doesnt sound like a lot for emergencies, but its just a starter fund. After you pay off your debt , youll want to build that starter emergency fund into a fully funded emergency fund .
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Address Your Credit Card Debt With Your Credit Card Company
Contact your credit card company. When you think you might miss a credit card payment, or you already have, contact your credit card company as soon as possible. Many will work with you to find a repayment plan that suits your current situation. Once youre late or miss a payment, youre considered delinquent. If you dont pay, the credit card company may block your ability to use your credit card and report the delinquency to the credit reporting companies. Generally, that delinquency can stay on your credit report for up to seven years. You could also face debt collection and be sued.
Find out what repayment options your credit card company offers. Credit card companies can, and often do, provide alternative repayment options. They depend on, among other factors, your income, how much you can afford to pay, and the amount you owe. They offer loss mitigation programs, sometimes called forbearance or hardship programs. Often these programs let you postpone a set number of monthly payments or pay a lower monthly payment at a reduced interest rate, until you repay the balance in full. If the credit card company determines that you cannot afford a full repayment plan within a certain timeframe, you might be able to negotiate to settle the debt for an amount lower than what you owe. This would depend upon the companys policies and your account-specific circumstances. Remember to get written confirmation of any alternative repayment option to which you agree.
What Are The Negative Effects Of Debt Consolidation
The only substantial negative impact of debt consolidation occurs if your discipline waivers. Specifically, you want to avoid creating new debts until you repay your old ones. Otherwise, your total debt will mushroom, leaving you in a far worse financial condition.
Comparing Debt Consolidation Methods:
|Average 600+ FICO||Scores below 600 OK|
Another possible negative would be failing to repay your consolidation loan on time. You will probably have to pay a late fee, and your lender may try to raise your interest rate.
If you fall behind by 30 or more days, your lender will report you to the major credit bureaus. Missed payments remain on your reports for seven years and can significantly hurt your credit score if they occur more than once.
While debt consolidation will reduce your CUR, it wont initially help your debt-to-income ratio. DTI values above 43% limit your access to credit. Only by repaying the loan will your DTI improve and permit you to access new credit.
Debt consolidation shouldnt harm your credit score and may even boost it when executed effectively. It will put you on a sounder financial footing and make it easier to access credit in the future.
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Work To Lower Your Bills And Day
At first glance, you may not be sure where you can cut back in your budget. But with a deeper dive, you may be able to find some opportunities. Start with your recurring bills. For example, if you have multiple streaming services but don’t use one or two very often, consider cutting them temporarily until you’ve paid off your debt.
Also, take a look at your car insurance premiums and shop around to see if you can get the same coverage with another insurance company for less.
In addition to those regular bills, take a look at how you spend your money every day. If you tend to go out for lunch during the week instead of bringing something from home, making that small change can free up a lot of cash flow.
Again, remember that you don’t necessarily need to change your lifestyle and spending habits permanently. But making small temporary changes now can put you in a better financial position in the future.
Consider A Home Equity Loan
Who its best for: Homeowners with fair to good credit that need a larger loan amount.
If you own a home and have at least 20% equity in your home, you may be able to consolidate your credit card debt with a home equity loan. Home equity loans typically have lower interest rates than other loans, and they have fixed interest rates that stay the same for the duration of the loan.
In general, lenders allow you to borrow up to 80% of the available equity, but the actual amount you can borrow is dependent on your credit, income and current home value.
For example, if you have a $400,000 home and owe $300,000 on your mortgage, you have $100,000 in equity. Lenders require you to maintain 20% equity in the home. In this case, youd need to keep $80,000 of equity, so the most you could borrow would be $20,000.
- Lower interest rates than unsecured loans
- Longer repayment terms
- Potentially higher loan amounts available
With a home equity loan, your loan is secured by your house. Because your home serves as the collateral, there is less risk to the lender, so you may get a lower interest rate on a home equity loan than youd get with a credit card or personal loan. Home equity loans typically have fixed interest rates that stay the same for the duration of the loan.
Because youre borrowing against your homes equity, you could qualify for a higher loan amount than you could get with other loan types.
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How To Get Started Paying Off Credit Card Debt
The next step for many people is a commitment to stop adding to their debt. They may even put credit cards away for a time and use cash or debit cards. Its also considered important to develop a monthly budget that helps you rein in spending so that you can boost your monthly “pay-down” numberthe dollar amount available to reduce your credit card debt. For more on budgeting, read Building Your Monthly Budget, One Step at a Time.
What About Debt Settlement
Consider debt settlement only if you have enough money in a bank account to settle your debt . Dont allocate money towards a debt-settlement stockpile if you anticipate having problems paying for the basics: food, shelter and utilities. Debt settlement might be a path for you after youve found a new job and have the income to tackle your debt.
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Should You Close A Credit Card After Paying Off Debt
Even if you manage to tackle your debt swiftly, it can feel like you’re spinning your wheels if you’re adding more to your balances each month. Consider putting a moratorium on your current credit card spending while you focus on eliminating the balances. Instead of canceling the accounts, however, consider keeping them in a safe location where you don’t have convenient access to them.
When you cancel a credit card account, it can potentially hurt your credit scores by reducing your overall credit limit. This can impact your credit utilization, which makes up 30% of your FICO® Score.
If you cancel a card with a high credit limit and have high balances on your remaining cards, even if you pay them in full each month, it could increase your credit utilization and negatively impact your credit scores.
On the flip side, if your card has an annual fee or a security deposit attached and you don’t plan to use it, it may be worth it to cancel and save money or get your deposit back. You can also consider downgrading your credit card to one without an annual fee.
If you decide to hold on to the cards you no longer plan to use, try to use them occasionally to keep the accounts active. Otherwise, your card issuer may choose to close down the account for you, which they can do without notice.