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[C1251]Credit Cards Personal Loans

by Peter Kenny, Pet

Credit card debt can become staggering, and for many consumers, that can happen a lot faster than they might imagine. When we consider that many consumers carry anywhere from three to ten credit cards in their wallets, it should come as no surprise that the payments on those cards can become overwhelming once they are used. What may be a surprise to some people is that often enough the total amount of money that is required to pay monthly credit card bills is more than any other expense encountered in the household.

There are some viable methods for reducing the total amount of money needed to pay credit card bills. Some of these are good, while others carry some serious drawbacks. One of the more popular means of paying off credit card debt is to take out a personal loan. On the surface this may seem like a great way to get rid of those expensive payments on the cards and replace them with a single payment for the personal loan. However, there can be financial hazards with this plan as well.

If you are considering taking out a personal loan to pay off all or some of your credit card debt here are some tips that might help you with that decision.

One of the first things that you should consider is the interest rate that you are paying on your cards as it compares to the interest rate of the personal loan. If your cards are carrying a very high interest rate (and this might be anything above 15 percent) you may want to think about a personal loan but only if the interest on the loan is going to be below what you are now paying. The lower it is below that high card rate the better.

Some consumers may be asking why not use a balance transfer program as offered by many of the card companies? It is a good question. One thing to keep in mind about balance transfers is that often the rate they allow you in the beginning is only a teaser rate and it will go up. You need to know what that final rate will be before you accept one of these offers. Also, you may be charged a fee which can become substantial if you have many balances from various companies that you want to transfer. Lastly, if you are only allowed to transfer a portion of your current credit card debt you will still have to make the payments on those cards that are not transferred.

If you qualify for a low-interest personal loan for the amount needed to pay off your credit cards you can, literally, pay them off and be done with all those monthly bills. For some consumers this is a wonderful way to get out of that crushing debt and, usually, keep more money in the household budget at the end of the month.

Another bonus is that using a personal loan to pay off high-interest credit cards offers a set date of final payment. In other words, if your personal loan states that the loan will be paid off in thirty-six months then you know that at the end of that time your bill is paid. It is the end. That is not often the case with credit card debt, which can seem to go on forever.

When you apply for and receive a credit card, you will want to take the time to create a detailed budget for your family's finances. Without a budget, and without carefully planning the credit card expenses, you could fall into the credit trap that many individuals have found themselves in. Swimming in a sea of debt that they have no way of getting out of. Having a credit card is a wonderful way to ensure that you have access to funds in the event of an emergency, or for use when traveling to eliminate the need for carrying cash on your person. As long as you keep the card for the purposes outlined in your personal budget, you will have no difficulty maintaining your credit card balance, making payments on time and using the credit card to it's fullest financial capacity. If you start using the credit card as if it was your personal debit card, you will likely find yourself in financial trouble.

Personal Budgeting Tips & Tricks

First, and most importantly, never spend more money than you can actually afford. This is easier said than done of course, especially when you include credit cards in the equation. It's very easy to buy now, with the intent of paying later, only to find out when later comes you still don't have the money! Using credit cards wisely however, can save you finance charges and enable you to make purchases and build your credit by making monthly payments in full and on time.

If you already have a credit card (or two) with balances, you should consider shopping around for credit cards that are offering promotional rates. Many companies will periodically offer a 0% balance transfer rate for all new customers who apply for and obtain their credit cards. Transferring what you owe from one card to another can help you save on interest and help you pay down your debt faster. This is a smart way to use credit cards!

Understand your credit card limit. Just because your credit card has a limit of $5,000 does not mean that you should spend that all at once! Ideally, a credit card should be used with the intent of the individual paying the balance in full at the end of each month. This will avoid finance fees, interest charges and allow you to make purchases on your credit card that are the same as paying with cash. As soon as you allow a balance to carry over from one month to the next, you are going to start seeing your account balance increase, instead of decreasing with your payments, thanks to high interest rates and finance charges on purchases.

When determining how much money you have available for purchases, you should first make a list of all of your outgoing expenses each month. Be sure to plan for incidentals and things that don't occur regularly- such as oil changes and car tune-ups. Also, consider your personal savings a monthly expense. (Just because you don't pay them monthly doesn't mean you shouldn't plan for them monthly!) Then, determine your monthly income. Subtract your expenses from your income to see what you have left over, and this should be your flexible spending amount in your budget. Even if you have access to a credit card, you should never spend more on a purchase than this “flexible” money. This will keep you from getting into serious financial trouble.

When you take the time to create a budget and follow it you are a responsible credit card user who will likely not end up swallowed by the dreaded debt monster!

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Both Peter Kenny & Debbie Dragon are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Peter Kenny has sinced written about articles on various topics from Credit Cards, Finances and Best Money Market. Peter Kenny is a writer for The Thrifty Scot, please visit us at and. Peter Kenny's top article generates over 368000 views. to your Favourites.

Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. This article has been provided courtesy of Creditor Web. Creditor Web offers great available for reprint and other tools to hel. Debbie Dragon's top article generates over 165000 views. to your Favourites.