Home Loans
Loans And Credit Cards
(presented by www.refinance-refinance.net - mortgage lenders)
By smf
It’s a fairly common process for people with excessive credit card debt to obtain personal loans in order to pay them off. Using the equity in your home to apply for a home equity loan and directing the funds towards debt management is an excellent method for getting your house in order in regards to your finances.
Any personal loan that is void of any security or collateral is a loan worth seeking depending on your credit history and credit score. Many people take a home equity loan to pay their credit card debt and while that is a viable option and will save you money over the long term, there are risks involved. What if you were unable to make your home equity payments for some reason? They can take your house!!!
Another popular avenue for some people is to access their 401k to consolidate their credit card debt. Immediate relief from credit card debt and the high fees and interest associated with such debts is a huge incentive for some to look for the 401K alternative. The compromise to such action is that your are forgoing future savings and security for immediate relief, but if the timing is right and your confident of repaying the loan it certainly is a viable proposition. The creditor in this case is yourself so there is extra incentive to repay the loan but the flexibility you don’t have with other forms credit loans.
The interest you pay back on the amount borrowed is also money you are paying back to yourself, but this method of paying credit card debt is not without its disadvantages, either. If you lose your job or quit, you may be expected to pay back the entire amount within three months or else you’ll have to pay taxes on the amount you borrowed.
To pay your credit card debt using personal loans, you might consider contacting your local bank to see if you could obtain a loan with a reasonable interest rate. By reducing your repayments through a lower interest rate on all credit cards and loans will make servicing your credit card debts and debt management overall a lot easier to achieve.
Any personal loan you seek or apply for to service your credit card debt will be at a fixed interest rate and repayment requirements on a monthly basis. Credit cards interest rates vary somewhat but you can be guaranteed they will be high with many fees attached if you are undisciplined and do not make your payments in time or only pay the minimums.
A savings account allows you the luxury of redirecting resources to areas of debt which have the potential to erode ones worth very quickly if left unchecked!!! It makes no sense at all to allow a credit card debt incurring a 17-20% plus interest rate on the outstanding balance whist having funds sitting in a savings account earning a whooping 1-2% does it??? Be smart and service your credit card debt before setting up any high yield savings account you will be thankful you did in the long run.
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