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<table>
 <caption>Statement Summary</caption>
 <thead>
 <tr>
 <th scope="col">Account</th>
 <th scope="col">Due Date</th>
 <th scope="col">Amount</th>
 <th scope="col">Period</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td data-label="Account">Visa - 3412</td>
 <td data-label="Due Date">04/01/2016</td>
 <td data-label="Amount">$1,190</td>
 <td data-label="Period">03/01/2016 - 03/31/2016</td>
 </tr>
 <tr>
 <td scope="row" data-label="Account">Visa - 6076</td>
 <td data-label="Due Date">03/01/2016</td>
 <td data-label="Amount">$2,443</td>
 <td data-label="Period">02/01/2016 - 02/29/2016</td>
 </tr>
 <tr>
 <td scope="row" data-label="Account">Corporate AMEX</td>
 <td data-label="Due Date">03/01/2016</td>
 <td data-label="Amount">$1,181</td>
 <td data-label="Period">02/01/2016 - 02/29/2016</td>
 </tr>
 <tr>
 <td scope="row" data-label="Acount">Visa - 3412</td>
 <td data-label="Due Date">02/01/2016</td>
 <td data-label="Amount">$842</td>
 <td data-label="Period">01/01/2016 - 01/31/2016</td>
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</table>




When you first hear the term “debt avalanche,” you may envision something that is huge, crushing and out of control. If that’s how you feel about your current debt, this kind of avalanche may actually be the way for you to break out of debt.
 Experts in consumer finance don’t always agree on the best method for debt repayment, however their opinions generally fall into one of two schools of thought—pay off the smallest debt first (debt snowball method) or pay off the debt with the highest interest rate first (debt avalanche method). The one that works best for you will depend on whether you want to see progress sooner or whether you are patient about waiting longer for results. Debt calculators like the one available at MagnifyMoney.com generally show that using the debt avalanche method will save you money in finance charges and get your debt paid off sooner.1
<h3>How the Debt Avalanche Works</h3>
Begin by listing all your debts, including credit cards, medical bills, auto, student and personal loans (exclude your mortgage from this list), with the highest interest rate at the top. This will be the first debt that you’ll pay off. If it is also the debt that has the highest payoff amount, you may be in for a longer wait before you are rewarded with a paid-off account.
<table>
 <tbody>
 <tr>
 <td>&nbsp;</td>
 <td>APR</td>
 <td>Balance</td>
 <td>Mo.Min Payment</td>
 </tr>
 <tr>
 <td>Credit card 1&nbsp;</td>
 <td>
 21.0%
 </td>
 <td>&nbsp;$5,400</td>
 <td>&nbsp;$148</td>
 </tr>
 <tr>
 <td>Credit card 2</td>
 <td>19.0%&nbsp;</td>
 <td>&nbsp;$7,500</td>
 <td>&nbsp;$193</td>
 </tr>
 <tr>
 <td>Auto loan&nbsp;</td>
 <td>9.8%&nbsp;</td>
 <td>&nbsp;$19,500</td>
 <td>&nbsp;$412</td>
 </tr>
 <tr>
 <td>Student loan&nbsp;</td>
 <td>4.0%&nbsp;</td>
 <td>&nbsp;$4,300</td>
 <td>&nbsp;$49</td>
 </tr>
 <tr>
 <td>Total&nbsp;</td>
 <td>&nbsp;</td>
 <td>&nbsp;</td>
 <td>&nbsp;$802</td>
 </tr>
 </tbody>
</table>
For the purpose of this demonstration, let’s assume you have a total of $1,000 per month to allocate to debt repayment. Using the example above, this leaves $198 after all the minimum payments are made. Add that $198 to the $148 minimum payment on Credit card 1 for a total of $346 each month toward that bill. Within a year, your highest-interest bill will be more than cut in half, as long as you don’t make any additional purchases on that card. The patience we mentioned earlier will come into play now because you’ll need to stay the course, making payments on time every month without adding more debt. When Credit card 1 is paid off, add $346 to the $193 you’ve been paying each month on Credit card 2. At $539 per month, that debt will be gone in a little over a year, and you will begin to see the avalanche effect as your other bills are swept away over time.



<h3>One exception—pay the IRS first</h3>
The one entity that takes priority over your debt avalanche is the Internal Revenue Service (IRS), which is not in the lending business. If you owe them money, you need to make that your first payment priority, or they may begin taking money out of your paycheck. The average American household carries $16,061 of credit card debt and pays a total of $1,292 in credit card interest per year.2 The debt avalanche method has helped many consumers find their way back to the surface and out of the red.
 
<ol>
 <li>http://www.forbes.com/sites/nickclements/2016/06/15/debt-snowball-or-debt-avalanche-how-to-eliminate-credit-card-debt/#235836d487d3</li>
 <li>https://www.nerdwallet.com/blog/average-credit-card-debt-household/</li>
</ol>

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Creating a Debt Avalanche to Wipe Out Your Bills

You make important financial decisions every day, and many of those decisions are linked to your credit score. At Merrick Bank, we’re committed to giving you the tools you need to monitor your credit score.Learn more about why your FICO®&nbsp;Score is so important and what it means to really understand your credit score.<h3>Why is your FICO®&nbsp;Score so important?</h3>FICO®&nbsp;is now the leading credit score on the market in the U.S., used by 90 percent of lenders,&nbsp;so it’s important to understand all of the decisions that may be affected. Whether you’re getting a loan for a car or a home or starting a new business, the better your credit score, the lower the interest rate you’ll pay. In short, a high FICO®&nbsp;Score usually means money saved, because applicants with higher FICO®&nbsp;Scores will generally receive more favorable rates that can translate into thousands of dollars in savings over the life of a loan.<h3>Understanding your credit score.</h3>Understanding what your credit score means and what affects it is the best way to get on track toward improving it. And that’s important, because establishing good credit can save you thousands of dollars a year, and even more with big purchases. It’s important to note, not all banks or lenders use the same version of FICO®&nbsp;Score. For example, some FICO versions are used for auto lending, while other versions are used for when lenders make decisions about whether to extend you a credit card offer.The good news is that the average score has been rising; yours might be one of them. In April 2017, the national average FICO®&nbsp;Score hit 700.&nbsp;To see your FICO®&nbsp;Score take advantage of Merrick Bank’s goScore by simply logging into the&nbsp;<a href="https://login.merrickbank.com/?iid=gblpost1017A">Cardholder Center</a>&nbsp;and accessing your up-to-date FICO®&nbsp;Score for free. If you aren’t enrolled in the Cardholder Center yet, you can&nbsp;<a href="https://logon.merrickbank.com/core/Enroll/Enroll?iid=%20gblpost1017B">enroll</a>&nbsp;today. It’s free for all Merrick Bank customers. Plus, you can enroll in email alerts that can help you manage your account.&nbsp;For even more information on credit scores, be sure to check out the new video series from FICO available at&nbsp;<a href="http://goscore.merrickbank.com/goScoreLearn.aspx?iid=%20gblpost1017C">MerrickBank.com/goScore</a>.The power to make the best credit choices starts with your FICO®&nbsp;Score. Find out what yours is today at&nbsp;<a href="https://login.merrickbank.com/?iid=%20gblpost1017D">Merrick Bank.com</a>.

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Knowing Your FICO® Credit Score Lets You Reach Higher

Owning your own home is part of the American Dream. It means setting roots, taking on new responsibilities, and finally having neighbors you don’t share walls with. But like the American Dream, owning your own home takes effort. And the work starts by taking time to understand the basics of a mortgage loan.Getting Back to BasicsIf you’re going to borrow money to buy a home, it’s important to understand what you’re signing up for. A mortgage loan is an agreement between you and your lender. The lender agrees to give you money to buy and take possession of a new home. And you agree to pay back the money over a set period of time with interest. If you default (fail to pay your mortgage payments), your loan is secured by the property, giving the lender&nbsp;<a href="https://www.mortgagecalculator.org/helpful-advice/what-is-a-mortgage.php">legal claim to the home</a>. Essentially, the basics of a mortgage loan involve you, a lender, a property, and a payment plan with interest.Choosing a LenderBecause your choice in lender is the start of a 10- to 30-year relationship, it’s important to go with someone you can trust to provide helpful advice and quality service. Compare lenders to find the best balance of rates, fees, conditions, and communication styles that fit your lifestyle. According to&nbsp;<a href="http://www.freddiemac.com/research/pdf/201804-Insight.pdf">research from Freddie Mac</a>, making just one comparison call could save you $1,500 over the life of your loan. And more comparison calls usually means more savings.Securing an Interest RateSeveral factors can influence the interest rate on your mortgage loan, including your credit score, down payment amount, loan term, and interest rate type (<a href="https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/">adjustable or fixed</a>). Even external market factors can impact rates. Let’s consider each item one at a time.<ul><li>Credit Score – Your credit score is used to assess your ability to make future loan payments. If you have poor credit, lenders are more likely to shy away from loaning you money.&nbsp;<a href="https://thelendersnetwork.com/what-credit-score-is-needed-to-buy-house/">You may still be able to get a mortgage loan</a>, but your interest rate will likely be higher based on perceived risk.</li><li>Down Payment – As a general rule, the higher your down payment, the lower your interest rate will be. If you can manage to put down at least 20% of your home’s price or appraised value,&nbsp;<a href="http://blog.credit.com/2014/12/6-reasons-you-might-want-to-make-a-larger-down-payment-102928/">your&nbsp;interest rate may be lower</a>&nbsp;and you may not have to pay insurance premiums.</li><li>Loan Term – Your interest rate may change depending on the amount of time you borrow money (usually 10, 15, or 30 years). Again, it comes back to perceived risk. Shorter loans usually have a lower risk of default. So, if you can pay off your loan in less time, your lender can offer you a lower interest rate in return.</li><li>Rate Type – Mortgage loans typically come with either a fixed or adjustable interest rate. A fixed interest rate stays the same for the life of your loan and&nbsp;<a href="https://www.bankrate.com/finance/mortgages/questions-rate-lock-answered.aspx">locks in prior to your loan funding</a>. Adjustable interest rates, on the other hand, are usually lower at first, but can change after an initial period, depending on market rates.</li><li>Market Factors – Finally, interest rates can rise and fall in response to&nbsp;<a href="https://www.investopedia.com/insights/forces-behind-interest-rates/">other market factors</a>. Things like inflation, overall employment rate, stock market conditions, government borrowings, and even gas prices can cause interest rates to go up or down. And they usually do so in connection with the interest rates set by the Federal Reserve. So, even though fixed interest rates will remain fixed for the life of your loan, prior to locking in your rate they are susceptible to fluctuation depending on the market.</li></ul>

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An Intro to Mortgage Loans

Building or rebuilding credit can seem like a daunting task, but it’s very important and even necessary for your financial future. Having good credit will help you qualify for loans, as well as determine what the interest rate will be.Whether you are just starting your credit journey or trying to rebuild, we at Merrick Bank are here to help keep you on the road to healthy credit. Here are a few things to keep in mind.<h3>Your Credit History</h3>In order to build credit for the first time or rebuild credit from past financial problems, you have to establish a positive credit history. This can be done in many ways. One option is to get a secured credit card (which is simply a credit card that requires a cash deposit that then becomes the credit line for the account).With a secured card you can often set your limit with the amount you’re able to put as a deposit and then show your ability to use and repay this amount.&nbsp;1Another way to help establish or rebuild your credit is by getting a co-signed credit card or loan. A cosigner is someone who shares equal responsibility for the debt. Having a cosigner can help you qualify for the loan. It can also be helpful to have “authorized user” status on another person’s credit card. This means that you have someone else’s card in your name, which allows you to make purchases, but prevents you from being the primary card owner. Please keep in mind, however, not all lenders report authorized users to the consumer reporting agencies.One great option is to get a credit-builder loan. This is a small loan designed to help consumers establish or boost credit. There are two main types of credit-building loans, including:Standard secured loan – somewhat like a secured credit card, the borrowers use money they already have in a savings account or CD to secure the loan.<ol><li>Standard secured loan – somewhat like a secured credit card, the borrowers use money they already have in a savings account or CD to secure the loan.</li><li>Unsecured loan – works well for someone who needs cash upfront; however, these loans can have a higher interest rate.</li></ol>Your lender can help you determine which option is best for you. Once the loan account is created and you begin making payments, you will start establishing/reestablishing your credit history. If you’re trying to rebuild credit, a credit-builder loan should increase your score as long as no other credit problems persist.&nbsp;2<h3>Practice Good Money Habits</h3>Practice good habits to demonstrate you’re creditworthy. This includes making all of your payments on time and keeping your credit utilization low. Credit utilization compares how much your credit card balance is compared to your credit limit. So, if you have a credit limit of $500 and use $250 in purchases, your credit utilization is 50 percent.&nbsp; A good rule of thumb is to not exceed a 30 percent credit utilization ratio at any point in a billing cycle on any one of your cards.&nbsp;3By keeping this ratio low, you show that you’re likely not spending much of your monthly income on debt payments. Credit lenders like to see this, because it means you’re more likely able to pay back the money you borrow from them. Avoid opening too many credit accounts, as doing so in a short period of time can have a negative impact on your credit score.&nbsp;4&nbsp;Instead, stick with as few accounts as you can. Your credit score improves with a longer credit history. So, be sure to keep the accounts you do have open for as long as possible.Another way to practice good money habits is to set up reminders to ensure you never miss a payment. Paying your bills on time will not only demonstrate that you’re creditworthy, but it will also help boost your credit score.Sometimes people struggle with knowing where to start when it comes to building or rebuilding their credit. The key is to start now and be patient, since this process takes time. Before long, you’ll be on your way to a great credit score. [1] Tate, Ashley. (2017, March 8).&nbsp;How Long Does It Take to Build a Good Credit Score?&nbsp;Retrieved from&nbsp;<a href="https://www.creditsesame.com/blog/credit/how-long-does-it-take-to-build-a-good-credit-score/">https://www.creditsesame.com/blog/credit/how-long-does-it-take-to-build-a-good-credit-score/</a>2 Johnson, Allie. (2015, April 23).&nbsp;Create, restore credit with a credit-builder loan. Retrieved from&nbsp;<a href="http://www.creditcards.com/credit-card-news/create-restore-credit-builder-loan-1270.php">http://www.creditcards.com/credit-card-news/create-restore-credit-builder-loan-1270.php</a>3&nbsp;Konsko, Lindsay. (2017, August 31). 5 Tips for Winning the Credit Utilization Game. Retrieved from&nbsp;<a href="https://www.nerdwallet.com/blog/finance/credit-utilization-improving-winning/">https://www.nerdwallet.com/blog/finance/credit-utilization-improving-winning/</a>4 How to Quickly Improve Your Credit Score. (2017, February 17). Retrieved from&nbsp;<a href="https://www.preventloanscams.org/credit-repair/improve-score-quickly/">https://www.preventloanscams.org/credit-repair/improve-score-quickly/</a>

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How to Start Building or Rebuilding Credit

As with many other questions related to credit, the question above doesn't have a "yes" or "no" answer. Intuition might say that closing a credit card account is a good way to curtail spending and improve your credit score, and in some cases that might be true. But everyone's situation is different, and it's important to look at the five key elements of a consumer credit score and evaluate what the effects might be in your particular case.Payment history&nbsp;makes up the largest single portion of your credit score - 35 percent - and its effects will remain on your credit report for years after an account is closed. For this reason, it is important to consider your payment history on an account before closing it. In the long run, the way to mend a negative payment history is to make timely payments for a couple of years.Credit utilization&nbsp;is the ratio between your total available credit and the amount of credit used. For example, if you have two credit cards, each with a $1,000 credit limit, your total available credit is $2,000. If the balance on Card 1 is $400 and the balance on Card 2 is $100, the amount of credit used is $500, or 25 percent of $2000. Your plan might be to pay off the balance on Card 2 and then cancel the account. Take into consideration though, that this would raise your total utilization to 40 percent ($400 of a $1,000 credit limit), a dramatic increase that could actually lower your credit score. Credit utilization accounts for 30 percent of your credit score, making this an important aspect in the decision to close an account.&nbsp;Length of credit history&nbsp;represents 15 percent of your credit score. An account that you opened 10 years ago and have always paid on time will show a longer, stronger credit history than a newer account, and perhaps should be kept open and active.New credit&nbsp;determines 10 percent of your credit score, and refers to the number of new credit accounts you have opened in the past year. If this number is high, it may negatively affect your credit score because it could send a signal to a lender that you're in financial trouble. This aspect of your credit score isn't greatly affected by closing a credit account, unless it means that your only remaining credit accounts are new.Credit mix&nbsp;shows the number of different credit cards, retail accounts, installment loans, finance company accounts and mortgage loans that are open in your name.1 It’s not necessary to have one of each, and it’s not a good idea to open credit accounts you don’t intend to use. Credit cards are considered revolving accounts and auto and student loans are examples of installment loans2 If you close an account that leaves you lacking in one credit type, the account will still appear on your credit report, but it will be labeled as closed. Credit mix represents 10 percent of your credit score. In the end, only you can evaluate the wisdom of closing a credit account. Before you close an account it’s worth some careful consideration before you take the scissors to your plastic card.<h3>Sources</h3><ol><li>http://www.myfico.com/CreditEducation/Types-of-Credit.aspx</li><li>https://www.credit.com/credit-reports/tips-for-improving-your-credit-types-of-accounts/</li></ol>

Most Recent Post

Creating a Debt Avalanche to Wipe Out Your Bills

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Knowing Your FICO® Credit Score Lets You Reach Higher

An Intro to Mortgage Loans

How to Start Building or Rebuilding Credit

If I Close a Credit Account, Will It Hurt or Help My Credit Score?