dcsimg

Ask the expert

Add captcha
Close
Enter the text shown above:

Should I request a personal loan to pay off my credit cards?

By , CardRatings contributor
  • Google +
  • Twitter
  • Facebook

If you've racked up some significant credit card balances, your neighborhood bank or credit union might offer a personal loan to help you pay down your debt more quickly. It's a good deal if you can meet all three of these conditions:

  1. You can get an unsecured personal loan with fees and finance charges far less than what you're paying right now.
  2. You're confident that your family, health, and employment situations will stay stable enough to maintain your cash flow while you pay down the loan.
  3. You're disciplined enough to prevent your credit card balances from creeping back up once you've paid your bills with your personal loan.

Otherwise, you may be better off shopping for a balance transfer offer from your bank or from their rivals. Competition has heated up again among lenders. Even consumers with fair credit scores have reported qualifying for some decent balance transfer deals. If you've paid your bills consistently over the past few years, you may even qualify for a deal with no upfront balance transfer fee.

Avoid taking out a personal loan that requires you to post collateral. In the late 1990s and early 2000s, many homeowners believed that they could save money by rolling credit card balances into home equity lines of credit. When housing prices collapsed, those HELOC deals haunted Americans who faced foreclosure because of their spending habits. A lender may sue you over an unpaid credit card bill, but they can't seize your home.

Sadly, I'm hearing more stories lately about credit card customers who fall victim to disreputable lenders. These companies use high pressure sales tactics to push low quality loans. Despite public scrutiny, predatory lending still impacts the unemployed, the elderly, and residents of low income communities. Don't do business based on a single telemarketing call. Instead, do your homework, research your prospective lender online, and avoid deals that sound too good to be true.

0 Responses to "Should I request a personal loan to pay off my credit cards?"

No Comments

Leave a Comment
 
 
 
About Our Ratings ×

Our editors rate credit cards objectively based on the features the credit card offers consumers, the fees and interest rates, and how a credit card compares with other cards in its category. Ratings vary by category, and the same card may receive a certain number of stars in one category and a higher or lower number in another.

The ratings are the expert opinion of our editors, and not influenced by any remuneration this site may receive from card issuers.

Advertisers in our database are highlighted, and advertisements include an option to apply using links on our site. CardRatings.com may be compensated by companies mentioned on the site when a user's application is accepted or approved by such companies.

How do your cards stack up?

Compare your card starting here

NEXT »

Featured Partner Cards

loading