The year-end holiday season is a here we are at giving and spending time with loved ones, so it•s no surprise that it may also be a period for growing credit card bills. According to Deloitte, holiday shoppers plan to spend an average of $1,387 per household on holiday-related items and experiences alone.
But racking up a credit card balance could be a threat to your financial security, especially if you already have a balance monthly. While you consider methods to address your credit card debt, debt consolidation with a personal loan is probably the best way to repay a large credit card bill.
How to pay off a sizable credit card bill
Personal loans are some of the most versatile loans available • they are utilized for almost anything. One of the most popular uses, though, is debt consolidation.
You can consolidate credit debt by making use of for a personal bank loan, finding the funds, after which using them to repay your charge card balance. This effectively transfers your debt from a credit card for an installment loan, which can make the repayment process easier and potentially even cheaper.
With personal bank loan rates being as low as they're today, you could save on interest if you use an unsecured loan for debt consolidation. If you'd like to obtain a feeling of what personalized loan options are available to you, you can visit PayPasser to compare rates and lenders.
There are some clear advantages to using a personal loan to consolidate credit card debt, but there are also some potential drawbacks that could make it less appealing.
Some from the benefits include:
- Personal loans have a set repayment schedule, so you know when you will be debt-free, and you won't get caught up within the trap of creating only the minimum payments and extending your debt sentence for longer.
- On average, personal loans charge lower rates of interest than credit cards – 9.34% versus 16.43%, according to the Federal Reserve – which means you may potentially cut costs.
- Paying off your credit card balances having a personal loan will immediately lower your credit utilization rate, or the percentage of your available credit you use in your cards, which could improve your credit background and score.
As with any loan, if you•ve decided to consolidate your financial troubles having a personal loan, it•s vital that you be sure you shop around to find the best rates. Visiting PayPasser will give you access to some of the best rates available.
On the other hand, there are several drawbacks to consider:
- There's no guarantee you'll get a lesser interest rate on a personal loan, particularly if your credit rating is less than stellar.
- Your payment per month will probably be higher than your minimum charge card payments, which could be unaffordable for some.
- Paying off your credit card could tempt you to definitely rack up more credit card bills, exacerbating your financial troubles problem.
It•s crucial that you carefully consider both the benefits and drawbacks of credit card consolidation with a personal bank loan to determine if it•s the best fit for you. Also, make use of a marketplace like PayPasser to explore personal bank loan options. Use an online personal bank loan calculator to discover how much it•ll cost you and whether it can save you.
What are my other available choices?
If your credit is within good shape, you could also want to consider utilizing a balance transfer charge card to pay down your credit card debt.
Balance transfer credit cards typically present an introductory 0% APR promotion (or near to it) for any set period. Some cards offer this promotional rate for as long as 18 months or even more. During this period, you can focus on paying off your financial troubles interest-free. Without any interest fees in the manner, you•ll not only cut costs but also eliminate your debt more quickly.
That said, there•s no guarantee you•ll obtain a big enough borrowing limit around the new card to repay other balances. Also, should you don•t commit to paying down the total amount throughout the promotional period, the card•s regular APR will kick in, and you•ll be back to paying better pay around the remaining balance.
If you•re considering a balance transfer charge card, visit a web-based marketplace like PayPasser to find the right card for you personally.
The bottom line
Dealing with credit debt could be stressful, especially if money is tight. But using a personal bank loan or perhaps a balance transfer charge card for debt consolidation could potentially help you save money as well as assist you to reduce your debt faster.
Before you pull the trigger on a single, though, take some time to research all your options. Even among personal loans and balance transfer cards, there might be stark differences. For example, some personal loans charge an upfront origination fee, while others don•t. Even though most balance transfer cards charge an upfront balance transfer fee between 3% and 5%, some don•t impose a fee at all. Compare personal loans and balance transfer cards to get the best fit for you.
Also, determine that using another product to get to a zero balance in your original card may cause you to definitely supplment your credit card bills. In this instance, you•ll are thinking about creating an agenda to avoid worsening the problem.