Credit card debt is impossibly hard to get out from under. Minimum payments, while they may be within your budget, mean you need years or even decades to pay off your balance. Just one unsecured personal loan can help you pay off your credit card debt in three to five years. There are a number of solid reasons to consider this form of debt consolidation loan.
Lower Interest Rates
With interest rates of 15, 20, 25, or even 30 percent, you end up spending a fortune in interest when you have a credit card. Interest rates for unsecured loans can be as low as six to seven percent to borrowers with good credit.
If you have a credit card with a $5,000 balance, an interest rate of 24.9 percent, and make the minimum monthly payment of $200, it would take you 14 years to pay that $5,000 off. Now take that same credit card balance and switch it to an unsecured personal loan with an interest rate of 10.9 percent. You would pay off that amount in five years making payments of $108 per month. That's a huge difference.
Payments Do Not Change
When you make your credit card payment a week, a day, or even an hour late, the company reserves the right to increase your interest rate. With an unsecured personal loan, you are locked in at the rate at the time of the loan. You don't deal with increased monthly payments because interest rates have risen.
Smaller Late Fees
With credit cards, paying late requires you to pay late fees of up to $40. If paying late puts you over your credit limit, you also pay over-the-limit fees. This adds up quickly.
You still face late fees with unsecured personal loans, but you don't face the over-the-limit fees, and that saves you money. If the late payment is as simple as a changed bank account number or a computer glitch, you can make a new payment and only face failed payment fees instead, which are often 50 percent less or more. You usually have 15 days leeway for fixing these simple mistakes.
Don't struggle to keep up with credit card debt. A personal loan is an affordable, stress-free way to eliminate credit card debt in just a matter of years.