Paying off high-interest debt like credit cards and other loans isn’t as complicated as you might think. If you want to get out of debt much faster, this is a common method Take advantage of a personal loan for debt consolidation or use a Credit card with zero percent annual interest rate (APR). to refinance. Either way, it means you combine all of the debt from each of your cards and loans into one monthly payment at a lower interest rate.
Many people are saddled with debt that never seems to go away. You may even be guilty of paying only the minimum required each month. This means that you pay most of the interest and use very little of your payment on the balance. In other words, your debt will continue to grow.
If you’ve decided to consolidate your high-yield debt, there are many options to consider. Among them, you can get a personal loan from a lender and use those funds to pay off all your debts, focusing on cards with higher interest rates first. Approximately 114.4 million Americans have took out a personal loan last year, according to recent Finder data. The average personal loan was $11,657.49.
Or you can open a new credit card which offers balance transfers at zero percent interest and pays off this debt with the card.
Should I take out a personal loan to consolidate my debt?
A personal loan can be a great way to get rid of your high-interest debt. While the average consumer according to a. has four credit cards Experian Report 2019some consumers have more, which can cause payment processing issues.
It’s a good idea to check each of your credit card and loan statements to find the interest rate. Some can be as high as 30 percent. The higher the rate, the less of your monthly payment goes towards eliminating that debt.
You should consider taking out a personal loan if you have high-yield credit cards and want to better manage them in one simple, lower-interest payment.
- Low APR
- Fixed installments with a fixed payment date
- You can usually borrow large enough to pay off all of your debt accounts
- There is only one bill to keep track of instead of having to remember multiple accounts
- The interest rate could be higher if your credit rating is spotty
- The loan may come with fees
- Installment credit, ie no continued access to credit
After weighing the pros and cons, you might be ready to eliminate that debt with a personal loan. Don’t take the decision lightly and make sure you do your research. one popular site for exploring your personal loan options is believable.
The site walks you through several steps to help you find the best loan and interest rate based on your financial situation and credit history. Once you get to the site, it only takes two minutes to get personalized quotes from multiple lenders. This does not affect your credit score.
Just Enter your desired loan amount and click on the “Debt Consolidation” tab.
When is opening a 0% APR credit card a better option?
Sometimes open a credit card with Zero percent APR may be the better option for you. This all depends on your end goal, finances, and credit history. If you have multiple high-yield cards and don’t need the extended time frame to pay off your loan (longer repayment periods that a personal loan offers), you may be better off using a credit card with balance transfer.
If you also want to access credit card funds through a revolving line of credit, a balance transfer card may be a better choice. Online marketplaces such as Credible has a handy list of credit card offers for zero percent APR funds transfers.
The final result
Especially in these challenging times, more and more people have been confronted with increasing debt. For more ideas to pay off your credit card debt during the coronavirusit’s good to consider a variety of options to see what works best for you.
Whether you’re consolidating your debt through a personal loan or consolidating your debt by transferring your balance to a credit card, you’ll have the peace of mind that your debt will be paid off much faster. Keep in mind that a personal loan often gets you a larger lump sum to pay off all of your debt, while a zero percent APR debt consolidation loan can be good for consumers who want continued access to credit.
But before you make a decision, remember to do your research. look at that Summary of nine of the best personal loans to choose from and find out what type of loan and terms they offer.