When you check your credit card balances, does it make you feel nervous, worried, and upset? Do the balances keep rising, and is it challenging to pay the minimum payments each month? Many people find themselves in this situation and are unsure about what to do. One solution you could try is consolidating your debts with a personal loan. Here are some things to know about this process if you are interested.
The Basics of Personal Loans
The first thing to understand is what a personal loan is and how it works. A personal loan is one form of installment loan that you can get. You can apply for one with any lender that offers them, and the lender will likely check your credit and require filling out an application. If approved, the lender will issue you a check for the proceeds. Some lenders deposit the funds directly into a person's account. You repay a personal loan over time through equal monthly payments. The loan will likely last for one to three years, but some might last longer than three years. The benefit of a personal loan is that you can use the funds for any purpose, including consolidating your debt.
How to Use a Personal Loan for Credit Card Consolidation
If you cannot pay your credit card bills, you can apply for a personal loan. Before applying, add up the total debt you owe. It would be helpful if you can get a personal loan for this amount. When you receive the proceeds, pay the total balance owed for each credit bill you have. After doing this, you will hopefully pay off every credit card you have. If you can pay off all your credit cards, you will have just one debt to pay — your personal loan monthly payment.
The Benefits of Consolidating With a Personal Loan
Using a personal loan to consolidate offers three main benefits:
- You have just one payment to make each month.
- You pay less money in interest because the personal loan rate is lower than your credit card rates.
- You have a timeline for becoming debt-free.
Paying one payment per month is a lot easier than paying five or ten payments. Additionally, your one monthly payment will likely be lower than the amount you were paying for all your credit card bills. If you would like more information about personal loans, talk to a company like Ardmore Finance today.