Personal Loans To Consolidate Credit Card Debt – Being smart about your personal finances isn’t just about being cheap. Unless it’s for health or Pokemon Go, there’s no reason to walk 5 miles so you can save on a “cheap” bus ticket. So we’re big believers in using your credit card to maximize your benefits, whether it’s air miles, cashback bonuses or reward points.
But, if we are not careful, we can be on the road to credit card debt. And taking on debt is definitely not smart. Due to the high interest rates on credit cards, leaving large balances on your credit card account will result in large amounts of interest. Here’s a simple infographic to help you understand the risks and what you can do about credit card debt.
Personal Loans To Consolidate Credit Card Debt
Do you need a debt consolidation loan? We help you compare the lowest personal loan interest rates.
Credit Card Debt Consolidation: Through Personal Loan
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If you’re not sure how to deal with your credit card debt, this guide to debt consolidation and credit card refinancing can help. (iStock)
Credit Cards And Bad Debt
If your credit card balances are difficult to manage, paying off those debts with a personal loan may be an option.
This is sometimes called debt consolidation. Others may call it credit card refinancing. In both cases, it means rolling your card balances into a personal loan, which you then pay off each month over time.
Here’s what you need to know about debt consolidation and credit card refinancing. If you’re considering consolidating credit card debt into a lower interest personal loan, Credible makes it easy to compare rates on multiple personal loans.
Credit card refinancing is when you use another financial product, often a personal loan, to pay off your credit card balances. You will then make monthly payments on that loan until it is fully repaid.
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This process can enable you to get a lower interest rate (credit cards have a very high rate compared to most personal loans), and it makes repayment easier, so you can make one payment each month in rather than several.
Credit card refinancing is usually for borrowers with decent credit and may qualify for personal loans with lower interest rates than credit cards.
Banks, credit unions and online lenders usually offer personal loans that you can use to refinance your credit card debt. This requires a credit check and various forms of financial documentation.
The lender you choose will depend on several factors, including your credit score and how quickly you need to fund the loan. For example, some online lenders can fund a loan as soon as the next business day after the loan is approved.
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It’s a good idea to compare personal loan rates before deciding on a credit card refinance loan. Creditors can easily view your pre-qualified rates in minutes.
In both scenarios, you use a personal loan or other type of loan product to pay off credit cards and other debts you may have. This essentially replaces your debts with one loan that you can pay off over time.
Refinancing your credit cards and using a balance transfer card have the same general principle, but the two can have very different results. With refinancing, you get one long-term fixed rate payment. It makes paying off many of your debts easier, and often leads to lower interest costs too.
With a balance transfer card, you use a new credit card to pay off another card (or multiple cards). These cards have a low introductory rate, often even 0%, which expires after 12 to 18 months. At that point, the rate rises significantly.
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Balance transfer cards can save you interest if you pay off the balance before the end of the introductory period, at which point you can’t repay the balance on your new card, which could mean a lot more interest costs down the road long
The right option depends on your balances, interest rate, credit score and other factors. In general, a balance transfer can be a good idea if:
Here’s an example: Say you have $10,000 in credit card debt and your bank offers a balance transfer card with 0% interest for 18 months. Under these terms, you must pay at least $555 each month to pay off the balance before the introductory rate expires. If this is not feasible, a personal loan may be a better option, offering a longer repayment period and lower monthly payments.
You don’t need a perfect credit score to get a debt consolidation loan, but the higher your score, the better your chances of getting a personal loan for the amount you need and at a favorable rate. Generally, you need a score of at least 650 to qualify, and a score of 720 may give you a better chance of getting the best APR available.
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If you are below these thresholds, you can try a bad credit debt consolidation loan or work on improving your score before applying.
When you’re ready to proceed with your application for a loan or balance transfer credit card, be sure to shop around. Rates, fees, terms and eligibility conditions vary by provider, so at least comparing a few lenders and credit card companies can ensure you get the best deal. Click on the banner below to learn more about Lendela, Singapore’s lending platform that offers the best loan rates from multiple banks and financial institutions based on your unique situation.
By combining your high interest rate loans with a lower rate debt consolidation plan, you can manage and eliminate your debt over many years. Debt consolidation loans typically have a one-time processing fee, a fixed interest rate, and a term of 1 to 10 years. The key is to find a low interest rate and fee while keeping your monthly payment at a reasonable level. However, you should be careful as some banks advertise rates “as low as X%”, which suggests they are offering you higher rates than expected.
That’s why Lendela is the best lender in Singapore for low-income borrowers to get debt consolidation loans.
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If you cannot consolidate your loan with a bank, you may need to go to another licensed lender. Lendela helps borrowers by allowing them to compare customized consolidation offers. It is also a good choice for those on a low income, with a monthly salary of only S$1,200. Finally, most Lendela applicants receive more than 1 loan offer on the same day.
Therefore, HSBC Debt Consolidation Plan is the best debt consolidation loan in Singapore for big long-term plans.
An HSBC debt consolidation loan is the best deal on the market for borrowers looking for large or long-term debt consolidation plans. This is because HSBC charges a low interest rate (starting at 3.4%), while also waiving the processing fee. For example, for loan terms of 1-10 years, it charges a flat rate of just 3.4%, which is cheaper than the average rate.
Those looking for the cheapest financial products often look for promotional offers. In this section, we highlight the best promotions available to applicants for debt consolidation plans.
Debt Consolidation Plans In Singapore By Golden Credit (s) Pte Ltd
Consider this if you are offered one of the lowest rates and can’t get financing anywhere else
Maybank debt consolidation loan is worth considering because of its promotional interest rate and cashback promotion. The bank is currently offering low promotional rates of 3.88%, Maybank is also offering a 5% cashback promotion for new DCP customers. So, if you prefer cashback promotion, Maybank is a good choice.
If you are looking to refinance your existing debt consolidation loan, we recommend that you do so
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