If you are looking to consolidate your credit cards, you can do so with a personal loan. Credit card consolidation with a personal loan offers some advantages and some things you should be aware of.
How A Personal Loan Can Help with Credit Card Debt
You can get a personal loan from a credit union, reputable lender, or the local bank to help consolidate credit card debt. You can use the loan money to pay off the remaining balances on your cards and then start paying back the personal loan in one set of monthly payments. This makes it so you don’t have to keep track of many payments each month and risk missing a payment. In order for this plan to work as it should, you will need excellent credit.
Your credit score helps determine the rates on personal loans. Having better credit will give you a better interest rate. If you don’t have great credit, you may not even be able meet the qualifications for the loan. You can check your credit scores using a free credit report before you apply for a loan. The loan officers look at credit score, as well as income and your debt to income ratio for the past few years.
You can be disqualified if you don’t have a high enough credit score or your debt to income ratio is to high.
Should You Do Credit Card Consolidation with a Personal Loan?
Whether or not you should consolidate your credit cards with a personal loan will depend on your situation. If you happen to meet the criteria for a personal loan, then your previous accounts with a credit union or bank could also qualify you for discounts on interest.
Online lenders will also offer personal loans, so you may want to shop around in order to find the best interest rate. Do research on the lender because some quick cash loans can be scams. If you qualify, then it’s a personal preference of whether or not you can handle the payments of a personal loan.
Advantages of Credit Card Consolidation with a Personal Loan
When you get approved for a personal loan, you will be able to use the cash from the loan to combine higher interest credit card debt. It’s much easier to make one payment every month, instead of five card payments. You will typically have three to five years to pay back the loan, so it helps give you a plan for paying off your credit card debt. If you pay your loan as agreed, then by the end of your term all your consolidated debt will be paid off.
What to Be Aware of When Using a Personal Loan
It’s important to remember that personal loans get paid back in installments. This means you will be looking at a monthly payment that is set for a certain time period. Conversely, a credit card is a more revolving line of credit. You are approved for a certain credit limit, you can make purchases on it, but will only have to pay the minimum each month.
Credit cards provide more flexibility than a personal loan does, but it can also be what gets people into trouble. Depending on how much debt you have and the interest rate you can get on a personal loan, there may be other ways to go about credit card consolidation. If you get a personal loan for credit card consolidation, make sure the payment is something that you can fit into your budget. If you miss a payment on a personal loan, then it can damage your credit score. Stay on top of payments in order to have a good payment history, which can help improve your credit score in the future.
A personal loan can be a great way to consolidate credit cards if you have great credit and can get a lower interest rate. Be sure to shop around for a personal loan and know that you can also get personal loan online. Before you start the process of credit card consolidation with a personal loan, make sure your credit score is cleaned up to give you a better chance of qualifying, as well as a lower interest payment.