Money Girl explains the pros and cons of using personal loans to consolidate or pay off credit card debt.
You’ll find out the best places to apply for a personal loan and how consolidating affects your credit.
Taking out a personal loan to pay off high-interest credit card debt may sound like an easy and simple solution, but it shouldn’t be done lightly.
If you’re making the minimum monthly payments on credit card debt, chances are you’re mostly paying the interest, and not paying down the actual principal by much. And if you miss payments or exceed your limit, your credit card interest rates can go up.
Personal loan for debt consolidation is ideal for moderate amounts of consumer debt. If so, consolidation via a personal loan might make sense.
If you expect to pay off your debt in the next six months to a year, however, then a personal loan probably isn’t worth it.
See also: 5 Ways to Get a Loan With Bad Credit You can get a personal loan at most banks, credit unions, and a variety of online lending companies.
The amount you can borrow depends on the lender, your credit, and your income.