Credit card debt totaled $729 billion for the second quarter of 2016 and its high rates often lead some consumers to languish in debt longer than they ought to. But credit card balances and other debts for that matter can be consolidated and repaid via a personal loan. If utilized properly, a personal loan is a smart and powerful tool to manage multiple debts and pay them off faster. »Looking for a personal loan for debt consolidation and more?»
We have rounded up a number of reasons why a personal loan and debt consolidation are a perfect fit to combat debt.
Reducing Debt, Its Cost
Credit cards often have higher rates but when you consolidate your credit card balances using a personal loan, you will be paying a lower interest rate. You are also reducing your interest rate expense with just one loan. And a lower rate can only mean a lower monthly payment.
Simplifying Debt Repayment
Personal loans can be repaid in two to five years, usually in fixed payments. The biggest motivation to using a personal loan for debt consolidation is having to make only a unified fixed payment every month.
It’s easier to track your debt with a single payment, making your whole life a lot easier.
Instilling Payment Discipline
When you take out a personal loan, be ready to make monthly payments in full instead of the usual minimum payments that credit cards typically require. This compels you to be better at repaying your debt.
It follows that your repayment schedule is something that will work for you. Consider these two scenarios:
- if you get a shorter term personal loan, you’ll be paying off the debt faster with higher monthly payments.
- if you get a longer term personal loan, you’ll be making lower monthly payments but more interest will be paid during the loan’s duration.
Building Your Credit
Diligently making your monthly loan payments has a positive impact on your credit report. And we all know how important a credit report and its offshoot — credit score – is in obtaining better deals in home loans, car loans, etc.
Your credit score will also receive a boost from having a lower credit utilization when you reduce or pay off your credit card balances through a personal loan.
Best of all, our credit won’t take a hit when you go for a debt consolidation rather than debt settlement.
Finding a Lender
There are many ways to source a personal loan for debt consolidation. You can ask your friends or family members for a loan structured in a way that’s beneficial to both parties. You can also apply for loans from banks and credit unions, with rates and terms depending on your credit.
If you’re not so confident with your credit, you can try talking to one of our lenders. We have access to a network of reputable lenders who can very well help you with your personal loan needs. »Let’s get started!»