If you are in the position of needing to pay off a credit card balance that you just can’t afford to do, there are plenty of strategies you can implement to pay it off easily and save money on high-interest rates. One of the go-to strategic moves that are often utilized in the situation of credit card debt that cannot immediately be paid off is to secure a personal loan to pay off credit cards, with the express purpose of paying off your highest interest credit card.
Generally speaking, personal loans tend to have much lower interest rates than credit cards do. This means that over time, paying off your credit card balance with a personal loan and then paying off the personal loan instead of the credit card can ultimately save you a lot of money.
However, just as with any other financial product, you must be certain you will not misuse the personal loan. It’s important to remember that a personal loan is still another way of taking out debt, so you are not yet debt free with a personal loan. While you may have paid off your credit card, paying off your personal loan will be another debt until itself.
It is all too easy to see that lump sum deposited into your account and talk yourself out of using it to reduce or eliminate credit card debt. This is a good, best way to pay off credit card debt.
This type of thinking should be avoided because it could drag you into further financial trouble.
Many lenders require you to specify what you intend to use the money for should they approve your application. If you are consolidating your bills, or paying off credit cards, most lenders will send the personal loan amount directly to those credit card companies rather than giving it to you directly.
If you have more than one credit card, and other bills that you would also like to pay down, consider applying for a debt consolidation loan with the bank where you currently do business. Many credit unions offer the best rates on personal loans.
One of the biggest advantages to a debt consolidation loan is that you are making one payment a month as compared to multiple payments to multiple creditors. Overall, you can realize a reduction in your payments because the interest rates will also be lower.
The chances of you missing a payment is also reduced because you do not have that many to manage anymore.