More and more people now know how to use signature loans with low interest and low monthly fee to restructure their debts. With signature loans, there is a defined loan term such as 3 – 6 years when you will pay off the debt. On the other hand, if you keep making minimum payments on your credit cards, you will not know when you will pay off your credit card bills. The lower interest rate can help to reduce the cost of the debt.
Low-interest credit cards may have interest rates from 10% – 15%. However, an online signature loan can offer a much lower interest rate of around 6 – 8%. Choosing a longer loan term can help you to get an even lower interest rate although you will have to pay a higher monthly payment. Consolidating your debts with a personal loan can help you to save thousands of dollars and it makes it possible for you to clear off your debt faster.
You can calculate whether taking out a personal loan will be cheaper by summing up the balance of all your credit cards plus the interest fees as well as the total monthly payments of the personal loans. It will be worthwhile to take out the personal loan if the total of the credit card balance plus interest fee is more than the total of the monthly payment for the personal loans.
The disadvantage of restructuring your credit card debt with personal loans is that you may have the tendency to start spending money on your credit card when you see that your credit cards have more available balance now. This should not be a problem if you can control yourself and don’t make any charges on your credit card temporarily. There is no need to close your credit card accounts because closing them can cause you to lose your credit history on those accounts in the credit report. You just have to maintain a low balance on the credit card.
Consolidating your debts into a personal loan can help to improve your credit score. You can easily miss payments when you have more than one due date to meet. Late repayment can have a negative impact on your credit score. If you consolidate your debts into personal loan, you only have one due date and only have to make one repayment.
Besides, it can help to put an end to the collection calls and takes away the pressure of being chased down by the collection agencies. Now that you can easily pay back your debt, you no longer have to worry about getting debt collector ringing your phone for many times in a day. You can sign up for a signature loan online through personal loan comparison site. It only takes a few minutes to fill in the online loan request form and you can expect to get approved in just a few days.