This way you could Pay Off your Credit Card Debt.
By consolidating your credit card, car & personal loan balance can help reduce the stress of multiple debts. Here’s how it works.
While credit cards can help you pay for a range of expenses, they can also become a stressful financial obligation. As of June 2019, there are 15,769,092 credit cards in Australia, with an average balance of $3,258¹. This means that Australians currently owe $31.3 billion in credit card debt. Yikes.
“Australians owe $31.3 billion in credit card debt¹.”
If you have credit card debt, you may be making multiple monthly payments with high-interest rates. But, instead of dealing with sky-high rates, what if you could pay off your debt at a lower interest rate and simple repayment terms?
This is where a personal loan may be able to help you pay off your credit card debt.
But first, what is debt consolidation?
Debt consolidation is the act of bringing all your existing debts together into one new debt. This is helpful as it can simplify multiple debts into a single repayment, giving you a clearer picture of your financial situation.
Here’s a bit of an explanation on how it works:
If you have three different credit cards with debts of, $2,000, $5,000 and $9,500, you’ll most likely have three different interest rates and be making three different repayments at different times each month.
This can be quite overwhelming and difficult to stay on top of your cash flow. Interest rates between cards may vary significantly and if the highest rate is on the card with $9,500 debt, you may be paying a lot in interest each month without even paying down the principal.
An option you have to consolidate your debts is to take out a single personal loan to pay off each debt with any outstanding interest. With a personal loan you’ll have just one repayment to make every week, fortnight or month over a set term – you can usually choose your own frequency of repayments. If the interest rate on the personal loan is lower than your credit card rates – and they often can be – this can help you get ahead in reducing your overall debt.
Save money in interest by consolidating your credit card debt.
If you can find a personal loan with better rates than your credit cards, it may be a smarter financial move to consolidate your debts into this loan.
The key advantages of debt consolidation could include:
- A potentially better (lower) interest rate
- Repayments that are easier to manage
- A means of providing a clear timeline outlining when you’ll be debt-free
Taking out a personal loan can also help with your budgeting. Instead of just having to make minimum repayments as you do on credit cards, you’ll have to make set repayments that cover both the loan amount and interest, which you know will end at a certain date.
Take control of your credit card debt.
Hopefully, now you have a better understanding of debt consolidation and how a personal loan could help you manage your credit card debt. We’re working with Wisr to offer personal loans at fair rates that are customised based on your credit score.
Feel free to contact us if you have any more questions about debt consolidation!
This post was brought to you by our lending partner,wisr . We’re working together to bring you a fairer deal on finance.
Disclaimer: This article contains general information only, and is not general advice or personal advice. Wisr Finance Pty Ltd does not recommend any product or service discussed in this article. You must get your own financial, taxation, or legal advice, and understand any risks before considering whether a product or service discussed in this article may be appropriate for you. We have taken reasonable efforts to ensure that the information is accurate at the time of publishing, but the information is subject to change. We may not update the article to reflect any change.
Posted on: April 16, 2020, By: Laxmi - LHL