How to Pay Less Interest on Your Credit Card Debt
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If you’ve got credit card debt, it may be hard to see the light at the end of the tunnel. Each month your payments go to reducing the debt, but it also goes to interest. And if you’re like most people with sky-high credit card debt, your interest rate is sky-high as well. If you can get approved, transferring your balance to a credit card with a lower interest rate or one with a 0% Intro APR on balance transfers can help. But if you can’t do that, a personal loan might be the solution. (See also: Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?)
Using Personal Loans to Tackle Credit Card Debt
Banks and credit unions might be willing to approve you for a personal loan with a lower interest rate than those attached to your credit card debt. But there are some warnings here: It’s not always easy to qualify for a personal loan if you’re already struggling with high credit card bills.
Secondly, if you don’t change your spending habits, the odds are high that you’ll run your credit card debt up again after taking out a personal loan to pay it off. Then, you’ll be stuck with your new credit card debt and a personal loan to pay off.
Make sure that if you are getting new credit to help pay down debt, you have created a plan for spending that doesn’t include racking up new debt on your old credit cards.
Personal loans can be a good alternative. They usually come with lower interest rates than credit cards, so it costs less over the long haul to pay these back. In essence, when you take out a personal loan, you’ll be swapping credit card debt that comes with higher interest rates for the same amount of debt at more reasonable rates.
You still have to pay your debt back — it just doesn’t generate as much interest each month, which means you can get rid of your debt faster.
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