Debt Solutions for Americans Struggling with Inflation: HELOC, Debt Consolidation, and More

The recent rise in inflation since 2022 has had a significant impact on millions of Americans, pushing them deeper into debt. Recent surveys have shown that nearly two-thirds of Americans are living paycheck-to-paycheck, with many households going into debt just to keep up with the increasing cost of living.

With inflation appearing to have stalled, now may be a good time for individuals to explore debt solutions and ways to reduce their burdensome debt load. One potential solution highlighted by Shmuel Shayowitz, the president and chief lending officer at Approved Funding, is a home equity line of credit (HELOC). Homeowners may benefit from lower interest rates offered by HELOCs compared to credit cards.

Debt consolidation is another option that could help individuals manage their debt more effectively. Erika Kullberg, an attorney and personal finance expert, suggests that combining multiple debts into one loan with a competitive interest rate could result in paying less overall. Additionally, transferring high-interest credit card debt to a card with an introductory period of 0% interest could also help individuals make a significant dent in their debt.

However, it’s important to consider the potential drawbacks of these strategies. Daniel Cohen, founding partner of Consumer Attorneys, warns that relying on balance transfers as a long-term solution could eventually damage your credit if not managed properly. Kullberg also recommends exploring personal loans as a lower-interest alternative to credit cards.

Working with a credit counseling agency or creating a debt repayment plan are other options that could help individuals analyze their financial situation and prioritize which debts to tackle first. By exploring these debt solutions and alternatives, individuals may be able to take control of their finances and work towards a more stable financial future.