Credit card debt – most of us have had it at some point in our lives. According to a recent WalletHub study, American families owe an average of $ 7,800 on their credit cards, and total credit card debt in the United States exceeds $ 926 billion.
If you’re one of those people with a lot of credit card debt, a personal loan can help you pay off your balances. Personal loans are best for people with good to excellent credit because you will be able to get low interest rates.
Councilor Forbes experts say they are good for debt consolidation, especially if you have multiple credit cards or cards with high interest rates.
“The advantage of this is that you now have one debt payment per month,” said Mike Cetera, chief loan officer at Forbes Advisor. “And you will pay it back within a set period of time, whereas credit cards will keep you paying them forever if you don’t pay them.”
Cetera says there are a few things to keep in mind when shopping for a personal loan.
First, find lenders and make a list of a few to compare. Look beyond your own bank, as you might find a better rate elsewhere.
“Yes, your bank on the corner of your housing estate offers them, credit unions offer them, but you can also find them at a wide range of institutions online,” Cetera said.
Then, pre-qualify if this is an option with the lender. It will not affect your credit and you will have a better idea of the APR and the terms of the loan.
Next, find out about the fees associated with the loan. You’ll want to know if there are any prepayment penalties or origination fees.
“If you are charged an origination fee, what usually happens is that they will just take those fees off the loan. So you might have applied for a loan of $ 5,000, but with an added set-up fee, you might only get $ 4,500, ”Cetera said.
Finally, find a lender with a proven track record in customer service. Read reviews on multiple sites to make sure you get a full picture of the company’s history with its customers.