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Consolidating debt starts with choosing the right loan. Research personal loans, look into requirements and consider how they might work for you.
If you’re approved for a personal loan, you then use the money to pay off your credit card debt. Some lenders offer debt consolidation loans, but these are just personal loans. Then the depositing the money into your account, you use it to pay off your credit card debt.
Be mindful of the interest rates involved. If you consolidate debt at a higher interest rate than that of your current debt, you could end up paying more in the long run. A loan that’s been used can also mean paying more towards interest over time.
After you take out a loan and consolidate your debts, you begin making monthly payments. Many personal loans offer fixed rates. So, if you consolidate with fixed rate payments, your monthly payment will be the same for the loan term.
Consolidating debt with a personal loan can simplify your monthly payments and may help you save on interest.
If you qualify for a large enough loan, you may be able to consolidate all your credit card debt into a single, convenient monthly payment. That means fewer bills and balances to keep track of, and just one payment to manage each billing cycle.
Depending on your current debt’s interest rate and the loan term of your personal loan, you may save money on interest.
Consolidating debt with a personal loan may mean lower monthly payments, but depending on the loan length, you may end up paying more in interest overall.
Getting a personal loan is important to be able to keep up with all of the payments. Even one missed payment can damage your credit score, so make sure you can fit loan payments in with manageable payments that work with your budget.
Higher interest rates mean it may mean paying more in interest over time.
Sometimes it’s not easy to pay more in the long term in exchange for a manageable monthly payment. For example, if you’re building, having a lower monthly payment can be helpful, but it can also mean paying more in interest over time. If your current payments are affordable and you’re comfortable with your budget, it may be better to stick for alternatives.
Personal loans aren’t the only way to tackle debt. Alternatives include using a debt payoff strategy and getting a balance transfer credit card.
A balance transfer card can give you some time to pay off your credit card debt while accumulating little or no interest.
A debt payoff strategy can help you pay off your credit card balances quickly and efficiently. Two popular options are the debt snowball and the debt avalanche.
Everyone’s financial situation is different. Whether it makes sense to consolidate debt with a personal loan depends on whether you can qualify for a loan and how the interest rate compares to your current debts. Remember – even if the interest rate is lower, if you’re making payments over a longer period, you may end up paying more in interest overall.
Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
