Consolidating credit card debt into a personal loan
Compare Personal Loans Generally, the credit card debt consolidation method involves using a credit card balance transfer.
Balance transfers involve rolling your credit card debts onto a credit card with a low interest rate or a 0% interest rate that lasts for a certain timeframe, usually the first 6-12 months.
So you can consolidate multiple outstanding amounts on credit cards that are charging you a high interest rate by transferring the balance of each card onto one credit card.
Currently on CANSTAR’s database there are 120 credit cards offering a 0% balance transfer.
Apart from cost considerations, individuals should strongly consider their own spending habits and their ability to repay their debts on time.Currently on Canstar’s database, personal loan interest rates range from a low of 4.53% to a high of 19.49% for secured personal loans, and a minimum of 6.28% to a maximum of 22.99% for unsecured personal loans.(See our 2016 Star Ratings Report for more information.) With fixed terms of somewhere between 2 to 7 years, borrowers are forced to repay the loan within the stipulated time period.Once the balance transfer promotional period is over, the interest rate charged on the credit card may revert to quite a high rate – in fact, some of the highest rates on our database.So if you haven’t paid the balance off in the specified timeframe, this can eat into any debt consolidation you’ve achieved up to that point.