If you’re looking to pay off your debts, you’re not alone. According to Experian, Americans had more than $756 billion in unpaid credit card debt in 2020. Meanwhile, the latest data from Experian indicates that the average credit card debt is around $5,525 per person. Suffice it to say that many people are looking for debt relief options.
Most debt repayment methods require you to pay interest, which means you could end up spending a lot of extra money as you work towards a debt-free life. While 0% APR balance transfer credit cards give you the chance to pay off your credit card balance before it starts earning interest, many consumers are too in debt to make payments before interest does not come into play.
Fortunately, you have alternatives. Open offers a new type of home equity agreement that allows you to use the equity in your home to pay off your debt, without monthly payments or interest. This debt consolidation alternative might be just what you need to get yourself out of debt, get your finances back on track, and start saving for the future.
Why do consumers go into debt on their credit cards?
Why are so many people asking for debt relief? Consumers incur credit card debt when making purchases on credit that they cannot afford to repay in full, even with the best of intentions. As interest charges continue to pile up, their debts grow and so do their monthly payments. Suddenly, what seemed like a simple monthly credit card balance turned into a full-fledged debt monster.
How can you get out of this kind of credit card debt? Some people are able to make it work with careful budgeting — but if your monthly payments already feel overwhelming, cutting back on other expenses may not do much.
This is where debt becomes dangerous. Once you start believing you’ll be in debt forever, you can start adding to your credit cards instead of paying them down. Your balances are increasing, your interest is increasing, and a debt-free life just seems out of reach.
For some consumers, the only thing that works is a debt reset. By paying off all of your debts, often with a lump sum of cash, you can bring your balance down to zero and start making better use of your money. This is where Unlock can help. By offering yourself interest-free money today in exchange for a percentage of the future value of your home, you could have everything you need to pay off your debt and start the next phase of your life.
Ways you can pay off your debt
There are many ways to get rid of credit card debt; However, some people need a little extra help to fully pay off their debt. Credit card consolidation, for example, allows you to combine your current debts into one monthly payment, but there are other debt consolidation alternatives that could also save people a lot of money in the long run.
Snowball and avalanche of debt
A popular debt repayment strategy, the snowball method motivates you to take out the smallest amounts of balances bill by bill. Start paying the lowest debt balance you owe and work your way up to higher ones. This method helps you build momentum and gain confidence as you pay off debt, creating a snowball effect.
Conversely, the avalanche method prioritizes paying off your debts with the highest interest rates first – the goal is to reduce the amount of interest you owe. This common debt repayment strategy will save you interest in the long run, giving you more funds to pay your principal.
If you consistently stick to one strategy or the other, you will see gains. The snowball method could help you pay off expensive debt faster, while the avalanche method could be a beneficial option if you have high-interest debt.
Credit cards with balance transfer
Many people with outstanding credit card balances use balance transfer credit cards to consolidate their outstanding credit card debt into one monthly payment. The best balance transfer credit cards offer long 0% APR intro periods that allow you to pay off your balance before it starts earning interest.
If you owe a lot of money to several lenders, loan consolidation could help you pay off your debt without having to worry about balancing several monthly payments. By consolidating your debt with one lender, you can make one payment per month. If you have a history of missed or late payments on your record, consolidating your debts could also help repair your credit.
Other people apply for debt consolidation loans, which often offer lower interest rates than credit cards.
Home equity agreements
Home equity agreements are another popular and effective way to pay off debt quickly. Whether you take out a home equity line of credit or apply for a reverse mortgage, using the equity in your home to pay off debt could save you money in the long run.
Open is a new home equity deal company that offers homeowners a unique way to turn their home equity into cash – without paying interest or being locked into a string of stringent monthly payments. With Unlock you get money up front, interest free. In return, you agree to give Unlock a share of the proceeds when you sell your home in the future.
Think of Unlock as an investor, not a lender. By donating a share of your home to Unlock, you have the ability to use the equity you’ve built up to pay off your outstanding debt. If you’re a homeowner looking for alternatives to debt consolidation, Unlock is definitely worth considering.
Why unlocking might be a good option
If you have a lot of credit card debt, Unlock could be a good alternative to loan consolidation. Some people may be able to combine their existing credit card debt onto a balance transfer credit card and pay it off before the introductory 0% APR offer expires, but many people have enough credit card debt to pay large sums. interests, no matter how they consolidate.
Unlock is a debt consolidation alternative that allows you to pay off your debt in full without paying interest. By donating a share of your home to Unlock, you will be able to access cash that can be used to pay off your debt in one lump sum. Imagine being able to start your debt-free life right away, without having to worry about monthly payments and interest rates.
Here are the pros and cons of working with Unlock:
- Unlock gives you access to money that can be used for anything you want, including paying off debt.
- There are no monthly payments or interest charges.
- You retain full ownership of your home.
- You must have accumulated at least 20% equity in your home.
- You must either sell your home or redeem the investment from Unlock before the end of your contract term (usually 10 years).
A from a common agreement with Unlock can give you 10% of your home’s value in cash now in exchange for 16% of your home’s value when you sell later. These percentages will be based on the housing market at the time of each transaction.
Let’s say your home is valued at $500,000 when the contract is entered into. Unlock will provide you with 10% of an initial investment of $50,000. At the end of the agreement, if your house retains its value, you will pay Unlock 16% of $500,000, or $80,000. If the market value of your home increases to $575,000, Unlock’s 16% share will increase to $92,000. If the market value decreases to $425,000, Unlock’s 16% share will decrease to $68,000.
Unlock’s share does not include the additional value added to the property over time. This means that if you do home improvement projects that increase the value of your home before you sell it, you can keep that value for yourself.
Who is a good candidate for Unlock? If you have at least 20% equity in your home and a FICO credit score over 500, you’ll probably be a good fit – and if you want to know for sure, here is where you can check your unlock eligibility. To learn more about how you can take advantage of this option, read our full unlock review.
The bottom line
Are you looking to pay off your debts quickly? Home equity agreements are a good alternative to debt consolidation and can allow you to pay off your debt with the equity you already have in your home. The breathing space that Unlock can create allows debt holders to focus on eliminating future debt pitfalls, while restoring the ability to lead a debt-free life.