How to Manage Debt and Relieve Financial Stress

Even when you’re on a budget, you can manage any outstanding loans and credit by making good decisions and learning the ropes.

4 min read

Whether you have a credit card bill or a student loan, getting a handle on debt is essential if you want a better financial future. N26 is here to help you reach your goals by giving you the knowledge and the tools that you need to succeed.

Even when you’re on a budget, you can manage any outstanding loans and credit by making good decisions and learning the ropes.

The four types of debt

  • Secured debt is backed by collateral, which is something of value that the borrower owns (like a car or house). If the borrower fails to repay the loan, the lender can seize the collateral. The lender is almost guaranteed to be repaid, which makes this type of debt more secure for the lender. A car loan is a secured debt because if you default on your payments, your car can be repossessed.

  • Unsecured debt is not backed by collateral. Instead, the loan is given to the borrower based solely on their creditworthiness (where having a good credit score comes into play) and their promise to repay. Student loans and credit cards are unsecured debts.

  • Credit line debt is a flexible loan that lets you borrow money up to a determined amount. You can pay it back, and then borrow it again. It’s also called revolving debt because you cycle through the process of borrowing and repayment. Having an open line of credit is convenient, but it can also lead to large amounts of debt.

  • Mortgage debt is a loan made to purchase a home, and is usually the largest debt that a person will ever carry. Mortgages have lower interest rates than other types of loans, and repayment plans are set up at 15- or 30-year terms.

Tips for managing your debt

You have the power to pay down your debt no matter where you are starting from. Here are a few things you can do to help you manage and bring down debt.

Choose debit instead of credit for daily purchases

Credit cards make it easy to overspend, even when you’re just making day to day purchases like getting coffee, lunch, or an Uber. All those small purchases can add up. With a debit card, you can only spend the money that you already have.

Avoid hidden bank fees

You have better things to spend your money on than sneaky bank fees for overdrafts, foreign transactions, and account maintenance. N26 has no hidden fees, so you can keep more of your money to help you improve your financial future.

Create a personal allowance

Allowances aren’t just for kids; they’re a smart way to manage your finances. It’s important to allocate money for wants and needs each month, even when you’re paying down debt.

Use a debit card that allows you to set spending limits

By putting a digital block on purchases and withdrawals past a certain amount, you’ll help yourself avoid overspending — no willpower needed. With the N26 app, you can set both spending and withdrawal limits instantly, putting you in control of your banking.

Get a side hustle

Boosting your income isn’t just good for debt management, it might also help advance your career in a way that makes you happy. What do you enjoy doing that other people would rather avoid? Brainstorm ideas for side gigs, from running errands to freelance jobs

Understand your unique spending habits

To change your spending patterns for the better, first you have to be aware of them, and that’s easy to do when you have the N26 app. See exactly where your money is going with N26’s automatic spending statistics.

Pay more than the minimum monthly amount

If you only pay what you absolutely have to pay (especially for credit card debt), your debt will last a long time and will wind up costing you much more in interest. Instead, pay as much as you comfortably can to save money in the long run.

Minimize your expenses

You don’t have to give up the parts of life that you truly love. But there are probably a few areas where you could cut back without feeling too much pain. Look over your spending statistics in the N26 app and decide what you can live without.


It’s easy to feel overwhelmed when you’re in debt. But millions of Americans have paid off their loans, and so can you. In fact, you’re already on the path to a better future.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

By N26

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