Personal Loans

500 - 100 000
Bad Credit
Get a Personal Loan
Others
Personal Loans
Personal Loan to Pay off Credit Card Debt

Some people will consider using a personal loan to pay off credit card debt. This is usually not a good move because the interest on personal loans usually exceeds credit card interest.

The borrower will still have to pay off the debt and may have to pay a high interest rate. Paying off the credit card debt directly is usually a better and smarter move.

Another drawback to using a personal loan to pay off credit card debt is that you may end up having less time to pay off the loan. Credit card companies will usually let a person keep a high balance as long as they make the minimum payments. Personal loan lenders usually want payment very quickly often within a few days or weeks.

The borrower will still owe the money but have to pay it off very quickly. Obviously this is not a very good deal for the borrower.

Advantages to a Personal Loan to Pay off Credit Card Debt

There are a few advantages to a personal loan to pay credit card debt. The biggest advantage is that the amount of credit available to the borrower will be greatly increased.

When credit card debt is paid off the borrower will be have more credit available. Some credit card companies may increase your credit limit if you pay off all the debt.

Paying off credit card debt can improve your credit rating because credit ratings are based on your history of paying off debt. This can enable a person to get more loans and credit cards. It should be noted that it can take several weeks for this information to show up on your credit report.

Another advantage is that personal loans are usually not included on your credit report. This can help your credit rating even though you will still have to pay off the loan.

Be Careful with Personal Loan to Pay off Credit Card Debt

A person should only use a personal loan to pay off credit debt when they have no choice. Generally, it will be cheaper to make minimum payments on the credit cards and pay off the debt when more money becomes available.

Always look into other alternatives to find the money to pay off credit debt before taking out a personal loan to do so. One good alternative to a personal loan is to use a home equity loan or line of credit. If you own real estate you could be able to use the equity in it to pay off credit card debt.

Such equity loans usually come with much lower interest rates and give borrowers a much longer repayment period than personal loans. This means that these loans are much cheaper and easier to pay off.

Limit Credit Card Use

The best way to avoid needing a persona loan to pay off credit debt is to avoid credit debt in the first place. Limit your credit card use to emergency situations or purchases you can’t avoid. Don’t use your credit for day to day transactions such as groceries and other purchases.

Instead use cash or your bank debit card to make these purchases. Only buy what you can afford and you can avoid running up a lot of credit card debt. Avoiding credit debt can help you avoid having to take out a personal loan to pay off credit card debt.