Trying to manage multiple credit card debts can be tricky. Keeping track of the payments due on each card can be a nightmare and then you’re also paying the exorbitant interest rates that come with a credit card. On top of that, missing payments on your credit cards can damage your credit score and that can hurt in the long term. So what can you do? Well, one solution is to consolidate your credit card debt into a single personal loan debt. This makes it easier to track a single debt and usually also offers a lower interest rate. That sounds great, but now you’re asking how do you choose the right personal loan to pay off credit card debt? On top of that, you’re probably asking yourself, ”how do I consolidate my credit cards?” Well there are a few things that you might want to consider when applying for personal loans and consolidating your credit cards. Most importantly, you want to make an arrangement that will benefit you and not put you further in debt. Finding the best arrangement requires a bit of time and effort, but it can definitely help you get on top of your finances and bring debt under your control. So here are some suggestions to help you on your way.
Make inquiries with your own bank
This sounds obvious, but it’s good advice. Starting with your bank is usually the easiest approach and potentially the best option because of the relationship you already have with your banking institution, especially credit unions. Your bank will most likely be able to advise you of how to pay off your credit card or save money in order to eliminate your credit card debt. It’s worthwhile to have a good relationship with your bank as you’ll often have dealings with them over a really long term. Your bank may also be able to help as they may know and understand your spending patterns so can assist you with consolidating your credit cards. Your banking institution may also offer member only services and products including loans with better interest rates. This leads us to our next step.
Focus on getting a low interest rate on the personal loan
Although consolidating debt makes it easier to manage, you lose one of the main advantages of switching from credit card debt to a personal loan if you don’t also get a lower interest rate. This way your payments will be lower and you are only responsible for one payment instead of a payment for each of your credit cards. If your interest rate is higher than your current credit cards, then you are just putting yourself further in debt. As I said above, you have to make sure that if you are going to accept a personal loan to pay off your credit card(s) debt, then it has to make sense for you and it has to benefit your credit in the long run.
Make sure your payments are affordable
If you are budgeting your money, then you should know how much you can afford to pay a month. Be sure you don’t enter an arrangement that you can’t afford. This is really about making wise money decisions. If you are having problems with budgeting your money, then perhaps you should speak about this with your loan officer so that you both work together to decide what monthly payment will benefit you.
Reconsider whether you need a credit card
Sometimes credit cards just end up encouraging bad financial decisions, especially if you are using them randomly and not for specific purposes such as: gas, groceries, or car expenses only. When you find yourself using credit cards to pay for lunch at fast food restaurants or to go on a shopping spree, then maybe you’re not be ready to handle the responsibility of a credit card. Now, it is true that some credit cards offer bonus points and dollars back if you spend at certain retail stores or restaurants. But a great deal of responsibility comes with that, especially if you are struggling to make the monthly payments. If used wisely, credit cards can help to build your credit rating, as long as you show good patterns of money management. However, maxing out your credit cards and then struggling to pay them off will be bad for your credit rating and cause you a whole lot of unnecessary stress. So getting rid of your credit cards can be a good way to reduce frivolous spending and impulse buys. It might also be good for your health. Make sure you follow these steps to help you select the best personal loan to pay off credit card debt. This option just might be the best choice for you if you are struggling to make your credit card monthly payments. Don’t continue to struggle. Give yourself financial freedom to by paying off those credit card debts and get in control of your finances.
If you found this article useful you might also like to read about the differences between credit cards and debit cards, and which might be better for you!