Stop Struggling and Pay Off Your Debt Faster — 5 Reasons To Use a Personal Loan To Consolidate Your Credit Card Debt
According to Experian, U.S. consumers are carrying more than $756 billion in credit card debt. They also reported that the average person owed more than $5,300 on their credit cards in 2020.
These eye-popping numbers point to a clear trend: millions are struggling to manage their credit card debt. If you’re having a hard time keeping up with your payments, you’re not alone.
While there are other options, lower-interest personal loans can be a great way to get your credit card debt under control.
What are the benefits of consolidating credit card debt into a personal loan?
Whether you have a high balance on a single credit card or multiple smaller balances adding up to a big financial headache, a personal loan can help. Compared to paying off credit card debt the standard way, personal loans have many advantages:
- Lower interest rates: When you lower your interest rate, you can reduce your monthly payment totals and save money in the long run. Since more of your payment goes to the principal, you can get debt-free faster.
- Shorter repayment terms: People usually pay off personal loans in shorter periods of time, which dramatically reduces the sting of cumulative interest charges.
- Predictable monthly payment with one interest rate: When you consolidate credit card debt via a personal loan, you replace many debts with one predictable monthly payment. Since this means you’ll only have one interest rate to deal with, you won’t have to worry about figuring out which credit card payment to prioritize.
- A single monthly payment: Juggling multiple credit cards can be time-consuming and frustrating. It also increases your likelihood of missing a payment. Personal loans simplify things. Instead of many different due dates, you only have one to remember.
- Improve your credit score: Reporting bureaus award higher scores to consumers who use multiple types of credit. Mixing in a personal loan diversifies your borrowing profile, which can raise your credit score. You’ll also benefit by improving your debt-to-credit ratio as you pay down your personal loan.
It all boils down to this: personal loans usually have lower interest rates than credit cards, making them very useful for escaping high-interest credit card debt.
How can I avoid taking on more credit card debt in the future?
Using a personal loan to consolidate credit card debt is a great first step, but it won’t get you out of the woods on its own. You should also avoid racking up more credit card debt while paying off your new loan. The last thing you want to do is end up taking on even more debt.
Personal loans also offer a cheaper way to cover expenses. If you need to borrow money for purchases or to pay bills, loans are almost always better than credit cards because their rates are lower. Plus you face few, if any, limitations on how you can spend the money.
So, in addition to paying off credit card debt, personal loans are also good for:
- Home improvement and renovations
- Car repairs
- Wedding expenses
- Moving costs
- Medical bills
- Big-ticket purchases, like furniture or appliances
Find better rates with a personal loan
Personal loans offer a safe and cost-effective way to beat credit card debt. However, you should make sure your new interest rate is lower than what you’re already paying.
So, be sure to choose a reputable lender with low rates and a strong service record. Find your rate now and take the first step toward being debt free.