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How A Personal Loan Can Help Tackle Credit Card Debt

overwhelmed young woman at table with credit card debt

Managing money can be challenging, especially when credit card debt starts piling up. And with December’s gift-giving season almost upon us, budgeting may seem impossible. In fact, “With the holiday season approaching, industry experts are also concerned that consumers will rack up even more debt on top of their rising energy bills, particularly as the cold weather kicks in and the cost of heating homes ratchets up” (Fickenscher, 2023). 

But you don’t have to stay awake worrying. There’s a solution that might be exactly what you need: personal loans. Let’s discover how using them can help you regain control of your finances.

The Burden of Credit Card Debt

These are challenging economic times, and “Low- and middle-income earners have been especially hit hard by soaring prices on everything from rent, groceries, and new and used cars despite the Federal Reserve’s attempts to tamp down stubbornly-high inflation” (Fickenscher, 2023). Many people are resorting to credit cards to pay for what they can’t afford. 

With their high-interest rates, it can be challenging to pay off your credit card balance, leading to a never-ending cycle of debt. This burden can make it almost impossible to save for the things that truly matter, including holiday gifts, trips, emergencies, and your future goals. It’s important to understand this debt isn’t something to shrug off. It can have a significant impact on your finances.

Personal Loans as a Solution

Currently, “Inflation-squeezed Americans are defaulting on their credit cards and auto loans at levels not seen since the financial crisis—and the struggle to pay their bills is poised to get worse as interest rates rise and the moratorium on student loans expires” (Fickenscher, 2023). So, how can personal loans come to your rescue? 

These loans typically offer lower interest rates, meaning you can borrow money at a more affordable cost. Paying off credit card debt in this way helps you reduce the interest you’re paying each month. Over time that can lead to substantial savings.

Personal loans also offer the advantage of consolidation. This means you can combine multiple high-interest credit card debts into a single, manageable loan. You’ll have just one monthly payment to worry about, making it easier to budget and stay on top of your finances. 

Benefits of Using Personal Loans

Using personal loans to eliminate credit card debt reduces your overall credit utilization rate. This is a big benefit because it can raise your credit score, making it easier for you to access better financial opportunities.

However, it’s important to remember personal loans are not a magic wand. They can be a valuable tool, but it’s still important to practice responsible borrowing. Make sure you have a clear plan in place to pay it back on time. Falling behind on loan payments can harm your credit score.

Managing Your Finances

Personal loans can be a lifeline when managing credit card debt. Their lower interest rates and potential for debt consolidation make them a powerful tool to help you regain control of your finances. Using them responsibly can also be a big step toward improving your credit score and securing a brighter financial future. If you’re feeling overwhelmed by debt, Bay Country Finance can help. Contact us today so we can show you how easy it is to apply for a personal loan.