Personal loans can be obtained from many banks, online lenders, and credit unions. The money you borrow when you take out a personal loan can be used for a variety of purposes. But one of the best things you can do with a personal loan is use it to control your credit card debt.
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A personal loan helps reduce credit card debt in several ways
A personal loan can be a valuable tool in dealing with credit card debt for several different reasons.
If you’re eligible for a personal loan, you can use the proceeds to pay off (or pay off) one or more of your existing credit cards. Doing this has several big advantages:
- You can consolidate your credit card debt. It’s much easier to manage the reimbursement a personal loan rather than juggling payments on multiple credit cards. By refinancing, you avoid the question of which cards to pay off first and you will only have to make one monthly payment instead of several.
- You should be able to lower your interest rate. Credit card debt often charges a very high interest rate. Personal loans for qualified borrowers can be offered at a much lower rate. If you can reduce the cost of borrowing by lowering your interest rate, it can become much easier to pay off your loans.
- You may be able to reduce your monthly payments. Depending on the interest rate and the repayment schedule of your personal loan, your new monthly loan payment could be lower than the payments you previously made on your cards. This can free up wiggle room in your budget.
- You can get a predictable time and amount of repayment. Personal loans have defined repayment schedules. Unlike when you have a credit card, you will know exactly when your loan balance is fully paid off. If your personal loan has a fixed rate rather than a variable rate, you will also know the total repayment costs that you will incur as you work to free yourself from your debt.
But a personal loan can only provide you with these benefits if you can qualify for an affordable loan and borrow enough to pay off most or all of your credit card debt. The good news is that you can easily shop around for the different personal lenders to find the loan that’s right for you.
Additionally, you’ll want to make sure that you can afford your monthly loan payments so that you don’t risk late payments. And, once you’ve paid off your credit card debts with the personal loan, make a commitment to no longer carry a balance on them. Otherwise, you could end up with a lot more debt, between paying off the personal loan and returning credit card debt.
Organize a repayment plan on a budget, so you won’t be tempted to charge a lot and can qualify for a personal loan at a good rate. You may want to seriously consider exploring the possibility of a personal loan that will help you deal with your credit card debt for good.