Although no one openly talks about, most people’s lifestyles are funded on credit. The difference between people is how they manage their credit and whether they are spending beyond their means. Due to volatile economic conditions, many people have lately been pushed into large amounts of credit card debt that they seem to have no hope of paying off. One option of getting out of this kind of unsavoury financial bind, is taking out a personal loan to settle your entire credit card debt in one go. If you’re worrying about “Should I take a personal loan to settle my credit card debt”, let’s delve deeper into the pros and cons of doing so.
Settle Your Credit Card Debt with Personal Loans
One of the main reasons that people turn to online personal loans is to settle off other much overdue debts, like credit card debts, in order to safeguard their overall credit scores. The longer you delay repayment of debts, the worse your credit becomes which will greatly affect you in the long-run, especially when it comes to taking out larger loans in future, when migrating to a foreign country or when applying for jobs. These are very specific instances where taking out a quick loan would be the best solution for you.
What is the difference between personal loan and credit card debt?
The biggest difference between quick loans’ debt and credit card debt is that when it comes to quick loans, it’s often a fixed amount that you agree to pay off when taking the instant cash loan whereas in credit card debt, the interest accrues as you keep making minimum payments. Furthermore, unlike online personal loans, your credit card is designed to encourage you to use it more and spend it more, often with lucrative credit card discounts and instalment plans. Therefore, it’s very easy to end up helplessly watching as your credit card debt spirals out of control.
How long should you get a personal loan for?
When taking out an instant personal loan, choose your repayment period very carefully. If your online personal loan repayment period is longer, you will end up paying more in interest and service fees. However, if a longer period will help you balance your finances and end up settling the entire instant cash loan without much difficulty, go for it as that will positively impact your overall credit score which will have great benefits in future.
When is it a bad idea to take a quick loan to settle credit card debt?
That being said, do not opt for online personal loans if you have no regular source of income. If you do so, even though the instant cash loan will get you out of credit card debit, you will just fall back once more into a personal loan debt which will leave you in greater debt and with an atrocious credit score. As the saying goes, “don’t jump from the frying pan into the fire.” Instant personal loans are only useful to re-calibrate your debt so that your credit score does not suffer, and you can start repaying off a new plan.
Once you have successfully settled your credit card with an online personal loan, make sure to exercise restraint and control when it comes to your spending habits. Getting out of debt is a liberating feeling and we at OnCredit are delighted to facilitate it.