Managing and paying down credit card debt can be a serious challenge. Here at Borrowell, we believe that a personal loan is a great solution for paying off credit cards. The benefits are clear: a Borrowell personal loan can be used to consolidate multiple credit card debts into a single, lower-interest loan with one manageable monthly payment. Moving your credit card debt to a personal loan can have huge benefits for your credit score.
Credit-card debt tends to be more damaging to credit scores than a personal loan, which is considered installment debt. The credit-utilization ratio does not take installment debt into account. This strategy would result in zero dollars of credit-card debt on the borrower’s credit report, which could boost their score by 100 points or more, says [Credit Sesame’s John Ulzheimer]. They’ll also pay lower rates to boot – MarketWatch
We weigh the pros and cons of a Borrowell personal loan vs credit card debt below.
Don’t get us wrong – credit cards are a very useful tool when used responsibly. We are also not advocating taking on more debt for debt’s sake. After all, when life’s expenses crop up it is best to pay cash if you can. However, credit cards are convenient, offer great rewards, and are great for use cases such as booking travel or shopping online. The danger with credit cards exists when you fall into the trap of carrying a balance month over month. Credit card interest rates are sky high. If you hold a large balance it can take you decades to pay off. That’s where Borrowell can help.
The Borrowell personal loan features no prepayment penalties, so you have the flexibility to make extra payments whenever you choose to lower your total interest due. The road to being debt-free couldn’t be easier. There is something nice about knowing that you can be debt free in 3 or 5 years or less – it adds a sense of control and responsibility. All it takes is one minute to apply online.
No matter if you choose to select a Borrowell personal loan or not, just know that we would love to help you along on your journey towards financial freedom. Follow our blog for more tips on how to manage your finances, improve your credit score, and move towards a credit card debt-free life.