Consolidate Credit Card Debt with a Personal Loan

article by Foster I. author
Are you swimming in credit card debt? Well, with a national average of close to $10,000 in credit card debt per household, at least you know you’re not alone! But what can you do if you want to clean up your credit score and get a fresh financial start?

If this situation sounds familiar, you just might want to consider taking out a loan from a trusted lender. Consolidating your credit card debt with an online personal loan can help you break free from financial stress.

Benefits of Consolidating Credit Card Debt

A personal loan can help people out in a lot of ways. If you are drowning in credit card debt, an online loan is a good idea for the following reasons:

  • Lower interest rates: You can find a lower interest rate than the astronomical rates that credit card companies charge.
  • Less headache: You’ll only have one payment to keep track of, worry about, and pay.
  • Lower monthly payments: When juggling several cards and bills, you can rack up a big overall payment each month. With only one low-interest payment to deal with, frequently you’ll end up paying a lot less per month, easing your monthly budget considerably.
  • Fixed rates: You can get a fixed rate, a feature that many compulsive spenders will do well with.

Additionally, when you pay back your unsecured loan in a timely fashion, you are actually building up your credit score. Using an online loan to get out of credit card debt is one of the best ways to improve your credit and reduce the burden of financial stress at the same time.

What to Watch Out For

While an online personal loan can be just what you need to get a fresh start on your finances, be sure to watch out for these pitfalls that often trip people up when they’re taking out loans:

  • Taking out a loan too soon: Loans are great if you are really stuck and need a helping hand. But if you’re successfully paying off your credit card bills each month, that’s good for your credit. In that case, a loan is unnecessary and can actually hurt your credit score. Avoid a loan if you don’t need it.
  • Not considering the monthly fee: Credit card debt is a burden, but people ease their minds (though not necessarily their long term debts) by only paying the monthly minimum. Taking out a loan, on the other hand, requires you to pay the full amount of the monthly loan repayment each month. While you can get a competitive rate, usually this amount will still be higher than the minimum on your credit card bills. Make sure this amount is within your budget to avoid missing payments and really ruining your credit.
  • Maxing out your credit card…again: If you use your unsecured loan to pay off credit card debt, but then rack up another astronomical bill while you’re paying the loan off, you’ve accomplished nothing. Take a break from using your cards while paying off the loan to give your credit history a breather. At the very least, only make charges that you’ll be able to pay off at the end of the month.

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Bottom Line

A personal loan can be the answer you’ve been searching for to get your life back on track. Make sure to borrow from a trusted lender, and set up a payment plan that allows you to pay back your loan regularly and responsibly.