It’s common to worry about money, but are Americans worrying about the wrong money issues?
For instance, many of us borrow money to buy a new car. Taking out a mortgage for the home of your dreams feels like a natural step.
But what about walking into your local bank to ask for a loan to pay off credit cards or to cover the costs of a big life event?
If you’re like many Americans, that’s one of the last things you’d want to do.
But if you dive into the numbers, taking out a personal loan to pay for expenses like revolving credit card balances can make significantly more sense than the common back-up plan of continuing to put everything on multiple credit cards. You’ll trade multiple payments at multiple interest rates for one fixed interest rate and a single monthly payment.
In fact, it’s a little like refinancing your mortgage. Many people refinance their mortgage to take advantage of lower interest rates which may be lower than when they initially took out their mortgage. Using a personal loan to refinance higher-interest credit card debt is very similar.
Why Consolidating Debt with a Personal Loan Makes Sense
Let’s say you have three credit cards with combined balances totaling $15,000. You could leave everything on your credit cards and continue to pay varying monthly payments at varying interest rates.
Unfortunately, by the time you pay those balances down, you may have spent a lot of money in interest. Handling the minimum monthly payments might be no problem, but carrying that big revolving balance with interest can definitely weigh on your mind and your bank account.
The solution is to consolidate those credit card balances with a personal loan, and here’s why:
- You’d trade variable-interest charges for a fixed interest rate. Since your interest rate would be fixed, your monthly payment would be fixed as well. So you’d know exactly how much to budget every month.
- You will make just one monthly payment – no more worrying about how much to pay on which card and when. Budgeting will be easier with one convenient monthly bill.
- You may pay less interest because the APR on your personal loan may be lower than the APR on your credit cards – You might even be able to pay off the balance faster.
How a Personal Loan Can Help
A personal loan can be a smart way to turn things around when higher–interest revolving balances get too high.
But what if you’re still not comfortable walking into your local bank to ask for a personal loan? Online options such as Discover Personal Loans can be an ideal alternative, especially if you want to consolidate debt.
You can fill out an online personal loan request form in a matter of minutes. You usually get an answer the same day. And if you’re approved, you could get the money the next business day after acceptance.
Think of personal loans as a hassle–free, common–sense way to put yourself in a brighter financial picture. No more taking the time out of your day to walk into a local branch – during their limited office hours – where you might feel awkward asking your personal banker for a loan.
A personal loan can help you conveniently refinance higher–interest debt … just like you might refinance a higher interest rate on your mortgage. It can be a smart debt consolidation strategy to help you pay off balances faster and pay less interest at the same time.