Are you swamped by credit card debt on two or more credit cards? The average American has 3 or more credit cards with a large to medium sized balance on them. The interested accrued on credit card debt can quickly pile up, before you know it you can quickly owe hundreds of dollars in interest on your credit cards. Any credit card with an interest rate of 15 percent or higher can pile on debt rather quickly if you carry large balances.
You could of course opt to a 0% interest rate introductory balance transfer, if your credit is still rock solid, meaning a credit score of at least 680, if not 720 or higher. These credit cards are highly coveted by consumers, but the credit requirements can put these cards out of reach of many in today’s uncertain financial climate. If you are starting to fall behind on debt, raising your credit up by performing credit repair might well be out of reach of you. There is also the fact that high credit card balances can quickly plummet your credit score due to too high of a credit utilization ratio. These cards can also be a catch 22, as if you do not pay off the balance in full by the time the intro period expires, you will be on the hook for interest in full.
So how can you effectively reduce this credit card interest, and make your debts more manageable? A personal loan can be a great choice to consolidate your debt and reduce your interest rates. Not only can you reduce your interest rates, you can also raise your credit score by going this route, in as little as 30 days! When you take out a personal loan to pay off your credit card debt, your balances go down to zero, but your available credit stays the same. With 100% of your credit limit available, your credit utilization rate is now 0%, which means if your prior utilization rate was higher than 30%, your credit score will see a boost. Whether the boost is a large one or only slight depends on how bad your credit utilization rate was. Many credit cards, such as CapitalOne have a credit tracker, where you can see the effects on your credit score using the various sliders to see how your credit score will go up if you pay off your revolving credit balances.
You might be wondering now about some of the perks of using a personal loan to pay off your credit card debt. There are several including:
* One set fixed interest rate
* One payment date vs multiple payment dates
* Lower interest than most credit cards
* Does not require pristine credit
* You can inquire what your rate will be with many lenders without affecting your credit score
The best personal loan rates will come from online lenders. The reason being is that these lenders cut out the middle man and the overhead that branches normally incur. The lenders pass this savings onto you, and makes them competitive against banks and even credit unions. Once upon a time credit unions offered the best possible rates on personal loans, but these days often times an online lender will be the best rate of a credit union on a personal loan.