Many people now carry debt on their credit cards. Not everyone is able to pay off their credit card balance every month and as a result there are many individuals who have a substantial amount of outstanding debt on their credit card. Credit cards often have high interest rates and before the principal sum can be paid off, the interest has to be paid first. Some cardholders manage to lower the amount of interest on their credit cards by switching to a lower interest card. This is certainly a viable option, but many cards offer low introductory interest rates only to switch to much higher rates after a few months.
Consolidate debt with a loan
Services such as MoneySupermarket debt consolidation allow you to put all your debt under one account. Not only do consumers in today’s economy have a lot of credit card debt, but there are also student loans and car loans that have to be paid off.
These loans often carry varying degrees of interest and there is the need to monitor each account to make sure it is being paid on time. For many who owe money on various loans or accounts, it makes sense to take out a loan so that everything can be paid off and then only one loan payment has to be made.
Loans often have much lower interest rates than credit cards do. When you combine that with the ease of consolidating all your debts in one payment, it makes perfect sense to go this route. Personal loans have fixed monthly payments and competitive interest rates that are applied for the length of the loan term.
This means that you know exactly how much you have to pay every month and that your loan is charged interest according to market conditions. Credit card companies often charge high double digits in interest fees, while loans adhere to market conditions and therefore cost a lot less. Many credit cards also charge an annual fee that is another expense that you do not have to pay if you take out a loan to pay off your card.