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Get Loan To Pay Off Credit Card Debt – Generally, you can’t pay off the entire balance on one credit card with another credit card, except by moving the debt from one card to another through a process called a balance transfer. While this method works for some financial situations, it doesn’t make sense for everyone. Since transferring debt from one credit card to another may not be a good idea because of your unique financial situation, you may want to weigh your options and consider other ways to pay off your credit card balance directly.
This article discusses whether you can pay off one credit card with another and offers options for paying off other credit card debt.
Get Loan To Pay Off Credit Card Debt
In some cases, you can pay off one credit card by transferring the balance to another credit card. Balance transfers allow cardholders to transfer an outstanding balance from one credit card to another, usually for a fee.
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Credit card issuers often offer introductory periods on new credit cards that don’t include zero interest or low APR (annual percentage rate) balance transfers; This gives you the opportunity to consolidate your debt into one account with their company.
While this is an indirect way of paying off one credit card with another, carefully consider the terms before going down this route. Introductory periods are limited and you may have to pay high interest at the end of the period.
Credit card companies usually require you to meet certain balance transfer criteria, including a good credit score. If you have bad credit, it can be difficult to qualify.
Also, your approved credit limit may not cover the amount you owe. Before applying for a balance transfer card, consider doing your research and reviewing the terms and conditions of different credit card issuers, as lenders have different terms and conditions.[2]
Should I Take Out A Personal Loan To Pay Off Credit Card Debt?
You need to do the math to determine if a balance transfer will save you money in the long run.
Let’s say your current credit card has a 20% APR, a balance of $2,500, and you pay $250 a month. It will take 12 months to pay off the debt, and you will owe a total of $2,758, including $258 in interest and fees.
Let’s say a new balance transfer card has a 5% APR (assuming a 0% intro APR after 12 months), includes a 5% balance transfer fee, and you pay $250 a month. It will take 11 months to pay off the debt through a balance transfer and you will have to pay a total of $2,625.
In this case, transferring the balance to a new card may seem worth the time and effort. Also, this calculation assumes that the new card has no annual fee and that the APR is 12 months. The initial balance transfer period may only last 6 months, so be sure to factor that into your calculations.
Pros And Cons Of Using A Personal Loan To Pay Off Credit Card Debt
Because cards and issuers have different approval requirements and credit limits, research the balance transfer credit cards that best fit your situation. The Forbes Balance Transfer Calculator can help you compare your options.
While you may be tempted to pay off your debt with a cash advance from another card, these cash advances are often large.
In addition to ATM fees and cash advance fees, you may have to pay a higher APR on cash advances than on regular purchases. Because cash advances can add to your debt, don’t use them as a last resort except in financial crises.[5]
Instead of opting for a balance transfer or cash advance, you may want to consider other ways to improve your personal finances.
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If you have debt that you feel you can’t manage on your own, the services below can help you regain control of your finances.
If you have good credit, you may consider taking out a personal loan to pay off your credit card debt. This idea makes sense if you get a personal loan with a lower interest rate than your credit card.
However, if you don’t manage your finances responsibly, it can lead to more debt. In addition, personal loans may have additional fees and interest rates depending on a variety of factors, including your credit score, information about your credit history such as late payments or discounts, the amount of the loan, and the terms of your agreement. .
Before you decide to take out a loan to pay off your credit card balance, consider the following factors:
How To Pay Off Credit Card Debt Fast
As an alternative to simply moving your debt through balance transfers or personal loans, you can pay off your credit card bills directly using the strategies below. You can also consider paying off debt or saving money first, perhaps by setting savings goals or adding extra worries.
If you have multiple credit cards with outstanding balances, you may want to start with the debt avalanche method. This debt repayment strategy recommends paying off the card with the highest interest rate before switching to the card with the next highest APR.
By focusing on high-interest credit cards, you’ll likely avoid more debt (in the form of interest charges) while trying to reduce it.
You can also try the snowball method to decide which debt to pay off first. This repayment strategy allows you to pay off the card with the lowest balance first to eliminate debt from lowest to highest.
Debt Snowball Can Pay Off $6,000 In 6 Months. Here’s How
While both methods can help you pay off your card balances, the snowball method allows you to build momentum and stay motivated while crossing debt off your list.[7]
Although you must make at least the minimum monthly payment on your credit card, paying only that amount can keep you in debt for longer. Your credit card report even includes a warning about how long it will take to pay off the balance and how much interest you will pay if you only make the minimum payment. Finding a way to pay more than the minimum amount each month may help you pay off your debt faster and pay less interest.[7]
While you can indirectly pay off one credit card with another balance transfer, it doesn’t always make sense to do so. You may want to consider other ways to directly reduce your debt.
To help you choose the right financial path, it includes tools and information to help you understand how to build or rebuild credit.
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Ana Gonzalez-Ribeiro, MBA, AFC®, is an Accredited Financial Advisor® and a bilingual personal finance writer and instructor dedicated to helping communities in need of financial literacy and guidance. His informative articles have appeared in a variety of news sources and websites, including the Huffington Post, Fidelity, Fox Business News, MSN, and Yahoo Finance. He also founded the personal finance and motivation website www.AcetheJourney.com and translated into Spanish the financial advice of Kathryn B. Hauer, CFP for Blue Collar America. Ana teaches personal finance courses in Spanish or English through the W!SE (Working in Education Support) program. He has conducted workshops for non-profit organizations in New York.
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The Pros And Cons Of Using A Personal Loan To Pay Off Credit Card Debt
They call a credit card “PLASTIC MONEY” which is absolutely true because by default the card looks like a useless piece of plastic. Why are people so influenced to use credit cards when they know full well that there are serious consequences to using them? Only pay with a credit card if you’re sure you’ll change your payments during your monthly billing cycle. Otherwise, it would be wiser to spend everything you have.
Be sure to read this article that clearly describes the negative effects of credit card debt and how you can get out of it!
Have you been in credit card debt for what seems like forever? Do you have so many bills that payday feels more like debt day? You and many other users are in the same boat. The total credit card balance in the United States is $703
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