Plastic money has become a staple of our life. Its usage in day to day expenditures has made it our go-to alternative even if it is not the necessary item to lay our hands on. However, it is of prime importance to get in control of our limit in using Credit Cards. Essentially, the first step to remain financially stable is to be in charge of our debts.
If you are the one who rely majorly on credit card for your expenditures due to your lifestyle demands, then it’s high time to take a back seat. It is important to keep a balance between your spending and earning capacity. Skipping credit card payments on time will attract hefty interest rates, which will have a negative impact on your credit score.
Do not fret! We have a smart solution.
Get the ball rolling now in taking corrective measures. Before it turns out to be an alarming situation for you, it is recommended to go for a personal loan to get out of the trap of struggle in the piled-up credit card debts.
All you need to do is go for a personal loan to address your issue. One personal loan will clear out all outstanding dues on your high interest credit cards.
Here we will discuss how a personal loan will serve as an alternative for clearing your debt.
Lower Interest Rates
The interest rates of personal loans are lower than the credit card interest rates. The interest rates range from as low as 10.99% on Personal loans, whereas interest rates of credit cards are levied to an individual not less than around 24–36%. If you go for personal loan, you will have significant drop in the amount which you will be paying as EMI’s on credit cards. Availing personal loan to consolidate all the debts will save you from further piling on the debts.
It will make an absolute sense if we are going forward with a personal Loan to balance our debts.
Nurse your CIBIL score
With Personal loan you can save yourself from slipping into p further debt cycle. Credit cards interest rates are higher compared to Personal loan interest rates, which will further compel you to get into the pit of debt. It will further be topped up with monthly late payment charges and penalties, leaving you with minimal scope of savings.
Obtaining a personal loan will pull you out from those financial troubles. Stepping on this path will help you in improving your CIBIL score.
Instead of Multiple Payments, there will be one payment for all
Availing personal loan to consolidate all your credit card debts will save you a hell lot of time and money. If you are possessing more than one credit card, you will be getting into the pit of debt, further and deeper. On an average the interest rate of credit card range between 35–45% annually. This is huge, and will drill a hole in your pocket significantly.
In comparison with Credit Cards, personal loans are charged at interest rates starting from as low as 10% with maximum ranging up to 28% in rarest cases. Going with the option of personal loan will benefit you in the long run too apart from being easy in your pocket.
Longer Tenure to clear your loan
Suppose you have your credit card with an annual percentage of 40%, your outstanding amount of Rs 50,000. In a year the interest charged for you will shoot upto Rs 20,000. This implies, you will now be burdened with the total amount of Rs 70,000 to clear off. It will leave you with a major hole in your pocket.
While with personal loans, you will have fixed and comparatively reduced EMIs. Here you can see the difference for yourself. Now you know which option will work best for you. Going ahead with credit card will significantly hurt your credit score as well as put you under further debt.
Personal loan will definitely serve as a great option in settling your already existing debt and getting back your credit history to a good health. Having said that, it is recommended you keep a few things in mind before applying for a personal loan.
Although personal loans are cheaper than credit cards but you need to keep the following points in mind while applying for a personal loan to clear your credit card debts.
Getting in depth about the extra features offered
Eye for comparing the add-on features which will differ with each lender. Lenders market their products showcasing extra benefits for you. In reality they will be trapping in the name of accidental covers or other features. The extra added costs and premiums will be added to your EMIs, turning it to be a compulsory expense to be paid. Get the facts clear, before going for the one.
Keep all costs in mind
Keep yourself informed about all the number of charges that come along with Personal Loans like processing fees, late payment fees, prepayment fees, etc.
Focus on your need, not for your eligibility
Depending on your income, the lender may offer you a higher loan amount as you will be eligible for that. Make sure not to borrow the amount offered according to your eligibility. Avail loan very specific to the amount you require to pay off the debts.
Personal loan can be availed with interest rates that can be flat rates or floating rates. It is advisable to opt for the flat interest rates, which will require you to pay the same interest rate throughout the tenure.
The piled-up charges on credit cards are sure to sore your financial facet. But with personal loans, you can change the outlook, getting back to financial stability
Originally published at https://www.bloglovin.com on August 6, 2019.