Was wondering if it would be wise to obtain a personal loan in order to pay off $4,500 in debt from two credit cards? In fewer than ten days, I will begin my maternity leave and won’t be paid my regular full-time salary for at least three months. I also rent my place. I have excellent credit—my score is about 710—but I feel like I’m being taken advantage of by only making the minimum payment on my credit cards.
That only makes sense in the event that interest rates drop.
Credit card debt and personal loans are all forms of debt.
Reducing your interest rates is a wise move. Getting them paid off is a wiser move.
The minimum payment is screwing you over. The majority of that is only being used to cover interest. Proceed with the loan if the interest rate is lower than your credit card balances; you will only be saving money. Just watch out that you don’t use up all of the available credit on your credit cards by accruing extra debt.
A credit card debt of $4,500 is not much. Not even something to scowl at. As long as you continue to make enough money to cover your debt, you should be able to maintain some debt. Pay more than the bare minimum. Remit the money you incurred during that time. Pay $200 if the groceries you purchased cost $200. Using a credit card is not meant to be a way to spend and then wait for the bill to become out of control. It’s so you may create a safety net of financial credit in case things get rough. The maximum period of time that a credit card balance should be left unpaid is 21 days.
If the loan has a lower interest rate, it might be worth considering. Just remember, there’s no “minimum payment” like with credit cards. While credit card minimums may cost more in the long run, if those payments are currently lower than what you’d pay on the loan, and you need to reduce your monthly payments short-term, sticking with the credit card minimums might fit your budget better for now.
However, if the loan offers lower monthly payments than your credit card minimums, it seems like an easy choice take the loan, pay off the cards, and focus on paying off the loan. Just make sure to stop using your credit cards, or you could end up in even more debt, making the situation much worse.
You’re merely digging yourself deeper into debt, in my opinion, by using debt to pay off other debt. It would be preferable if you could pay off the $4,500 with savings funds.
Are you submitting a disability claim in your state if you’re taking a maternity leave? After taxes, the disability and paid family leave cheques essentially replaced my maternity leave income. I recently finished my leave of absence. I kept all those checks and used them to pay off many credit cards. Using credit cards when taking out a personal loan can only cause you to sink deeper into debt.
makes sense if you intend to stop using the cards and the interest rate is lower. If not, you will eventually accumulate credit card debt and need to take out another loan.
Your goal is to become more unified. It only makes sense in the event that the loan’s interest rate is lower. To consolidate a few other loans and credit cards that were approximately 30%, for instance, I recently took out an 11% loan. As long as you don’t rack up credit card debt again, a lower interest rate will enable you to pay off the loan more quickly.