How to pay the invoice of the card with personal loan?

Credit card consolidation is the act of paying your entire card bill with another type of loan, usually under more favorable interest terms. One way to do this is through a personal loan, but you need to know how to make this payment so as not to get into financial trouble.

Can I Use a Personal Loan to Consolidate My Credit Card Debt?

Can I Use a Personal Loan to Consolidate My Credit Card Debt?

Yes, you can consolidate credit card debt with a personal loan, but is it the best option? It depends on your situation.

There are several ways to consolidate debt, including personal loans, loans with friends or family or even transferring credit card debt to another bank. These consolidation methods can be done without the help of a professional, company or financial institution. In general, it is best to avoid professionals and financial institutions because you do not need to pay someone to do what you can easily do yourself.

Why should I pay my credit card with a personal loan?

Why should I pay my credit card with a personal loan?

The benefits of debt consolidation of one or more credit cards with a personal loan do not differ much from using any other consolidation option. You should choose the cheapest and most effective option for you based on the following:

Go for the simplest. Consolidation allows you to have a greater control of finances and not have to take into consideration the interest rates of one or more cards, limits released, how much interest you pay in each installment. You centralize all costs and control on just one loan.

The interest rate is lower than what you are paying on the credit card . Consolidation allows you to get a lower interest rate. Interest charges can keep people in debt much more than they need to be, and these small expenses quickly add up to ever higher values.

Before you pay your credit card, compare the options available and confirm that interest rates are actually more attractive not to get in the way. (Photo: www.beyondbank.com.au)

Using a personal loan to pay off the credit card should be part of a larger plan to become debt free. If you have a plan of action to pay off your debt once and for all, and consolidation is part of this plan, it is probably a good idea to use a personal loan as long as it is the cheapest consolidation option, ie the cost effective (CET) is lower than that of the credit card.

Other options for paying your credit card bill

Other options for paying your credit card bill

Contact your credit card companies and ask for lower interest rates. Determine whether or not you can pay off your debts in a short amount of time (six months to a year, or less) with the personal loan. If the answer is negative, you should adapt your plan to pay off the higher interest rate debts before using a personal loan.

Reasons Not To Pay A Credit Card With A Personal Loan

Reasons Not To Pay A Credit Card With A Personal Loan

Your debt is manageable . If your credit card debt is relatively small or will be paid in a short amount of time, it may not make sense to consolidate. Consolidation is mainly used by people who believe that there is no other option to repay their debt in a reasonable time frame. This means that you will pay your bill in full or more than 80% of it at maturity. Any other payment percentage should lead you to seriously consider the loan, since the interest rates on the credit card are very high.

You’re messing around, not solving the problem. No matter how many times or when you move your credit card debt: Unless you are committed to paying it, it will continue to accumulate debt. Just consolidating debt should be part of a larger debt repayment plan, not an attempt to feel like you have made progress when, in fact, you have not made any progress.

There is a cheaper, more attractive option. There are several ways to consolidate debt, and the one you choose should be based primarily on what makes the most sense for you financially. For example, a balance transfer may be cheaper if you can pay the installments of the card on time.

If you decide a personal loan is the way forward, make sure you seek the best rates before signing any loan agreement. And before confirming the loan, use our comments to clarify any questions you may have.

Leave a Reply

Your email address will not be published.