Best Personal Loan To Pay Off Credit Card Debt
Debt consolidation refers to the process of repaying credit card debt with a personal loan. By using the funds from a personal loan to pay off credit card debt, you can remove numerous monthly high-interest card payments and consolidate the debt into a single monthly loan payment—often at a lower cost.
Personal Loans
01
- Top Ranked Choice
5
Personal Loans
02
Personal Loans
03
Personal Loans
03
- Top Ranked Choice
5
Average Review
Personal Loans
- Est. APR = 9.99 - 39.99%
- Loan Term = 2-7 Years
- Loan Amount = $1k - $50k
- Min Credit Score = 600
4.8
Average Review
Personal Loans
- Est. APR = 7.80 - 35.99%
- Loan Term = 3-5 Years
- Loan Amount = $1k - $50k
- Min Credit Score = 580
5
Average Review
Personal Loans
- Check Your Eligibility
- Fixed rates and terms
- No prepayment fees
5
Average Review
Personal Loans
- Flexible loan amounts
- Fixed rates and terms
- No prepayment fees
Personal Loans For Credit Card Debt
A personal loan is a frequent way to consolidate credit card debt. Credit card interest rates normally range between 20% and 30%, with some cards charging up to 36%. Personal loans, on the other hand, have lower interest rates, typically ranging from 8% to 20%. As a result, consolidating your credit card debt with a loan might save you money in interest while also combining your bills into a single payment. If you are aware of the hazards, a personal loan might be an effective strategy to pay off credit card debt.
Related: Leading Personal Loan Providers for Debt Consolidation
Pros of Using a Personal Loan to Pay Off Credit Card Debt
The greatest credit card debt consolidation loans can help you pay off your debt faster than making the minimum monthly credit card payments. However, a personal loan has additional benefits.
You may earn a lower interest rate.
Personal loans have an average interest rate of less than 16 percent. If you have a good credit score, you might get even better deals on personal loans. That means you might consolidate your accounts, lower your overall interest payment, and perhaps pay off your debt sooner.
Consolidation streamlines payments.
If you make many credit card payments each month, debt consolidation may be a good solution because you’ll have only one monthly due date and payment.
By consolidating your credit card payments with a personal loan, you will only have to make one monthly payment. Reducing the amount of installments can assist you avoid falling behind on repayment.
You Could Improve Your Credit Score.
Taking out a personal loan boosts your credit mix, which accounts for 10% of your score. Carrying a wide range of credit and debt demonstrates to creditors and lenders that you are financially responsible.
You will also reduce your credit utilization by repaying your debt. If you pay off your credit cards with a personal loan, your utilization will drop to 0%. However, a good interest rate is a crucial consideration when taking out a personal loan, so look at the average personal loan interest rates before applying.
You may be able to repay your debt sooner.
If you merely make the minimum credit card payments each month, it may take years or even decades to pay off your amounts, depending on how much you owe.
A personal loan allows you to pay off your credit card debt right away and set up a repayment plan. Terms vary depending on the amount borrowed and the lender, but a short term can help you repay your loan fast.
Cons of Taking a Personal Loan to Pay Off Credit Card Debt
Consolidating credit card debt with a personal loan may have negative repercussions, including cost. Consider these disadvantages as well before making a decision.
Taking out a personal loan may lead to more debt.
A personal loan indicates that you are borrowing more money. If you take out a personal loan to pay off your credit cards and then start carrying a balance on them again, you’ll end up with more debt than before.
A personal loan for credit card consolidation is not a debt elimination tool; instead, use it after exploring other possibilities, such as increasing credit card payments every month or comparing a balance transfer to a personal loan.
You are not guaranteed a lower interest rate.
Personal loans typically provide cheaper interest rates than credit cards, although this may not be the case for everyone. If you do not have excellent credit, you may be unable to obtain a personal loan. If you qualify for a personal loan with terrible credit, your interest rate may be no lower—or maybe higher—than what you’re already paying.
Personal loans have fees, too.
Some lenders levy a variety of costs, including late payment fees, origination fees, and insufficient funds fees, for example. Be aware of this when comparing personal loan lenders.
Personal Loans
01
- Top Ranked Choice
5
Personal Loans
02
Personal Loans
03
Personal Loans
03
- Top Ranked Choice
5
Average Review
Personal Loans
- Est. APR = 9.99 - 39.99%
- Loan Term = 2-7 Years
- Loan Amount = $1k - $50k
- Min Credit Score = 600
4.8
Average Review
Personal Loans
- Est. APR = 7.80 - 35.99%
- Loan Term = 3-5 Years
- Loan Amount = $1k - $50k
- Min Credit Score = 580
5
Average Review
Personal Loans
- Check Your Eligibility
- Fixed rates and terms
- No prepayment fees
5
Average Review
Personal Loans
- Flexible loan amounts
- Fixed rates and terms
- No prepayment fees
