Excessive credit card debts are a precursor to future financial problems. You already are on the road to a financial downward spiral if you owe more on your credit cards than you can afford to pay off this month. This outstanding credit card debt will inevitably even affect your credit scores.
If it is impossible for you to pay debts by making a lumpsum payment owing to the fact that you don’t have the required cash in your account, do not fret. There are smarter ways of tackling this issue. One such way to repay credit card debt is getting a personal loan.
How to get a Personal Loan for your Credit Card Debt?
With the help of a debt consolidation loan, which is a personal loan that you can take from a bank, you can resolve your credit card debt issues. In a personal loan, the local bank or credit union issues a single personal loan to clear out the balance on your high interest credit cards.
All you need to do is pay up fixed monthly installments to the bank over a certain period of time, say around two to five years. The interest rate of loan varies depending upon your credit profile. The loans credit rate will not change during the shelf life of the loan.
Advantages of Getting a Personal Loan
1. It offers you a guarantee that your credit scores will improve:
Unlike credit cards that are basically revolving accounts, a personal loan is an unsecured installment loan. With a personal loan you can easily pay off your outstanding card debts, and be on the right way to build your CIBIL credit score.
Imagine the trouble if you didn’t have this option; you would’ve continued defaulting on the credit card outstanding due to high card rate. Also, the penalties and monthly late payment charges would’ve eaten into your remaining financial credibility. This is why obtaining a personal loan to pay off your credit card debts is a good idea.
2. It is not an expensive debt:
For many people, taking more debt to clear your credit card debt does not make sense but think about it. The reason credit card debts pile up to such a huge amount is because they come with a high interest rate. In fact, the interests you pay on your credit card debt are rated higher than any other interests you will ever pay.
Even for individuals with good credit, the interest rate for general use credit card is over 15%. If you are paying a high credit card rate, the interest rate on your personal loan is cheaper. So it is better to repay a personal loan than attempt to repay a credit card debt.
The Bottom Line
Getting a loan for credit card payment an effective strategy if you find a loan with a cheaper interest rate than the one that is put on your credit card debt. You can even steer clear of inviting additional debt while you are in the process of settling your already existing debt.
It is also a good option if you are someone who finds it difficult to maintain a track record and keep up with the many smaller payments but need to do away with your credit card debt. If you possess high credit card balances that are out of proportion to your earnings, a personal loan can improve your credit to a great extent.