Using Loans to Save Yourself From Credit Card Debt
Many economies thrive on credit. So many people are in credit card debt and do not know how to pay for it. The absolute worst time to take credit is while you are already in deep debt. It is especially risky to have credit cards if you are a person with bad spending habits It is easy to overspend when you have a card full of cash, and you don’t look at it as cash belonging to the bank. Having cash at hand is a great idea for emergencies. However, it can be risky for people who fall into temptations easily. Most people have credit cards, yet most people do not know how they work.
This is true and yet it sounds like a joke. Unfortunately, people do not truly realize the monetary risks they take by spending money off of a credit card. Every $100 you spend in credit is not the same as the $100 you pay to the card. You could easily and quickly find yourself paying off credit card debt for your entire lifetime if you combine bad financial habits with a lack of knowledge. However, this article is bout the loan options available for people who are looking to cut through their credit card debt. Depending on your personal circumstances, one of the following loan options may be applicable to you.
Drowning in Credit Card Debt
Here are the options in the event that you have racked up too much Credit Card debt and you are looking to pay it off quickly.
Many banks offer Credit Card balance transfers without any interest for limited periods of time. For example, a balance transfer for 2 months accumulates 0% interest with some banks. Over 6 months, the interest rate clock in at 1.7% per month. Some banks even offer a low-interest rate of just 1% per month for 12 months on a balance transfer.
However, it is important to bear in mind that you should take these options only if you are certain about paying them back. The time periods are usually 12, 6, or months. Normal interest rates resume after the period of low-interest rates. If you don’t pay off the debt within that time, you will be stuck in a debt trap forever.
Home Loan Top Up
In case you have a Home Loan and you have been religiously paying the installment for a long time, think years, then you have the option of asking your bank for a top-up loan. Based on your payments over the period, the bank will consider whether you are eligible or not. The interest rate will be in line with your mortgage interest rate, which is typically far lower than other types of loans. This happens to be one of the best ways to clear off credit card debt at a minimum cost.
Loan Against Security
This type of loan is a good choice in the event that you have some type of assets like gold or land. In this case, you can consider taking a loan against security. The advantage of taking this type of loan above the typical loan is that your interest rates will be significantly lower than other short-term loan varieties. It also encourages you to be diligent with your loan repayments since you know that your assets are at stake.
Short Term Personal Loans
Remember that taking a short term loan to help you settle accounts like Car Loans, Gold Loans, or Education Loans is perfectly acceptable. That’s because the short term loan against property offers attractive interest rates compared to other options. However, never take a short term personal loan for a vacation or for leisurely activities. Short term loans are typically looked at as last resorts, or for emergencies only.
Of course, it goes without saying that you should compare the charges before settling for any type of loan. Do your homework and do the math. You will come to the right decision and be debt-free if you have the commitment to it! Needless to say, the best way to get out of credit card debt is not to create more of it for yourself to get out of in the first place! It sounds silly, but it needs to be told!
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