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Should you pay off credit card debt with a personal loan?

January 31, 2014   - Jules
 
     

While paying off your credit card debt may not be your highest priority right now, itís worth taking some time to work out exactly how much you are paying out in interest. Taking out a personal loan to pay off that debt could save you heaps in interest, and it could save you years of being in debt.

Personal Loan

If you find the right personal loan, you could clear your credit card debts and start paying them down straight away. You should be paying a lower interest rate than the rate attached to your credit cards, and with regular monthly repayments, you will know that you are chipping away at your debt every single month.

Another Credit Card

Another option could be to take out a balance transfer credit card. With this type of card, you transfer the balance of your existing credit cards and store cards onto a new card, and your transferred balances will attract a much lower interest rate for a certain period of time. If you choose this option, you will need to make sure you are committed to paying off a certain amount each month, as there is no set repayment schedule. You will also need to make sure you donít start racking up debt on the old cards now that they are clear of debt.

Use a calculator

If you want to find the best option for paying down your credit cards, try using an online calculator. You can use a personal loan calculator to see how much you could save in interest by rolling all your credit cards into one loan. You can also use a balance transfer calculator to see if a balance transfer card is the right way to go.

Find the right personal loan

When it comes to choosing the right personal loan, there are several important factors to consider. If you want to save money on interest, you will need to find a loan that offers lower interest rates than your current cards. Try to choose a personal loan borrowed over the shortest period of time, and be sure to take into account any fees and charges.

Improve your credit rating

You can also use a personal loan to improve your credit rating. By making sure you pay all repayments in full and on time, you are working towards a better credit rating. Future lenders will be able to look back on the way you dealt with this loan, which may make it easier to get approved, and it may also mean you are eligible for lower interest rates.
 
     
     
     
     
 
 


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