Consolidating Credit Card Debt into Personal Loan

Usually when it comes to credit cards, people tend to spend recklessly. Since credit cards are a convenient option to avoid huge wads of currency in the pocket, they are used even if there are no funds. Under such instances, it can become burdensome when the bills keep mounting, with no sign of repayment. In such a scenario, converting the credit card debt into a personal loan is an option.

Why to Convert Credit Card Outstanding into a Personal Loan

The benefits of consolidating with a personal loan may not differ much from using any other consolidation option. However it is advisable to choose the cheapest, most effective option depending on the requirement. Here are some circumstances why you can think of converting your credit card debts into a personal loan:

●       It’s simple because when you consolidate, you may be required to keep track of only one bill, interest rate, and due date, as opposed to multiple bills which can be frustrating.

●       The interest rate is lower than the interest paid for credit cards. The interest rates levied on a credit card are between 36% and 44% per annum, whereas for a personal loan, the rates applicable are around 12% and 19% per annum. By consolidating, a lower interest rate can be obtained.

●     Consolidating the credit card outstanding can help in becoming debt-free. It is a good idea to use a personal loan, if it’s the cheapest consolidation option.

When not to convert Credit Card Outstanding into a Personal Loan

Though it can be very alluring to consolidate your credit card outstanding, it should be a well-thought of process. Before you think of converting your debts into a personal loan, check for the following criteria:

●       Can you manage your debt?

In case your credit card debts are small and can be paid in short time, it is better not to opt for consolidation. Generally, people who have huge bills and are unable to pay off their debts in a reasonable time convert their outstanding debts into a loan.

How to take charge of your credit with Personal Loan Calculators?

●        Are you able to move off the debts?

It doesn’t matter how many times or where you move yours debt. If you’re committed to paying it off on tie, it won’t be sticking around for too long. Consolidations should be considered only when there is a bigger debt payoff plan.

●       Is there a more appealing option?

There are several cheaper options to consolidate debt. The one you may choose should be not be a burden instead. Hence, weigh out different options before you choose for a consolidation method.

●       Can the credit card company lower the interest?

Before you decide to consolidate, call up the Credit Card Company and request to lower interest rates. In case you have been a long-time customer and paid off all bills on time, the company may consider your request.

Once you have decided to consolidate the outstanding into a personal loan, check for attractive rates among local banks, credit unions and online lenders. It is also essential to read comparisons and of the loan providers.