Smart Reasons to Use a Personal Loan to Pay down a Credit Card Balance
Credit cards are a perfect way to earn points and take care of emergencies that need some quick cash to address. However, if you are not careful, it is easy to spend a lot of money than you can afford and accumulate significant balances that may be difficult to pay off.
Luckily, if you have big balances, you can use other means to pay them off. One strategy that most individuals use to pay down their credit card balances is taking a Canadian personal loan to consolidate their credit card balances and other debts they may be carrying.
Here are some of the smart reasons why most individuals use personal loans to pay down their credit card balances.
Lower Interest Rate
The obvious benefit of using a personal loan to pay down credit card balance is the low-interest rate. In most cases, you can find a personal loan with low-interest rates than what you are currently paying on your credit card balance.
Moving your credit card balance to lower interest rates will help you save a significant amount of money each month. The APR, also known as the annual percentage rate, is a great way to compare loan rates.
Loans with lower APRs means lower interest rates and lower monthly payments for any amount borrowed. Irrespective of the credit card balance, taking a personal loan to pay your credit card debt is a sure way of saving money in the long run.
Offers Final Payoff Date for Your Debt
Lines of credit and credit cards are forms of revolving debts. With revolving loans, you can continually add to your balance and pay it back slowly. While this may seem like a good idea, you may end up being trapped in a vicious cycle of debt if you are not careful.
With the ever-increasing balances, you may soon hit the roof and find yourself in big trouble. This is where a Canadian personal loan may be of help. Personal loans provide you with a specific date when you are expected to have paid your debt in full. This way, you can always work towards a specific date.
As long as you stick to your monthly payments, it won’t be long before you pay down your personal loan debt and start enjoying financial freedom. Stick to the plan, and soon, you will forget about the high-interest credit card debts for good.
Fewer Monthly Payments to Focus On
If you have several credit cards with balances, consolidating them makes your life simple. It will help you reduce the number of payments that you need to keep track of. Instead of making so many monthly payments, you consolidate your credit card balances with a single personal loan, so you have one monthly payment to focus on.
With personal loans, you don’t have to worry about exorbitant interest rates since everything is determined before you are approved for the loan. You know how much money you owe the lender, the minimum monthly payments you are expected to make and the specific end date of your loan term.