Best Loans to Pay off Credit Card Debt

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Accumulating debt can bring an enormous bearing on your life and peace of mind. It can quickly become overwhelming and is usually accompanied by heavy stress and strain.

Debt management becomes increasingly difficult and stressful when it involves multiple credit cards. It can be confusing, chaotic, and almost impossible to track. But like any other problem, credit card debts also have a solution. And today, we want to take you through the core elements of effectively clearing your credit card debts. It involves getting suitable loans, understanding credit card rates, and being aware of the right information.

Amounts
$1,000 - 35,000
Loan Terms
6 months to 6 years
Credit Check Type
Soft check
Min Credit Score
580
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
Amounts
$500 - 10,000
Loan Terms
3 months to 6 years
Credit Check Type
Soft check
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
Amounts
$500 - 40,000
Loan Terms
2 months to 5 years
Credit Check Type
Soft or Hard
Min Credit Score
580
Bad credit
Allowed
Approval rate
High approval rate
Time for decision
Average 2 minutes
Type of service
Connector
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How to Get a Loan to Pay Off Credit Card Debt

So, how do I pay off my credit card debt? The good news is that it’s definitely possible. However, it means understanding a few things about loans and credit. Furthermore, it implies putting this information to good use. Paying off a credit card debt means there may be certain sacrifices you have to make. It also involves taking out the right kind of loan(s) to clear your dues.

While all of this is easier said than done, the right information and knowledge will allow you to strategize for a debt-free future. To pay off a credit card debt, you will need the money that equals or exceeds your debt. If you are already in debt, this means you don’t have immediate access to cash. Here is where you need to get the right loan for your situation. These options have been explained in greater detail below.

Credit Cards and their Interest Rate

The interest rate is one of the main elements of credit cards and their utility. Also called a finance charge, the interest rate is a combination of more than one factor. But it depends a lot on the balance you keep pending at the end of the month.

Your credit card’s rate is calculated in terms of the APR (Annual Percentage Rate). This rate should be disclosed to you when you’re applying for the card. Whatever interest rate is imposed is a combination of your billing statement and your daily/monthly balance. The higher the APR the higher monthly payment is required. The good part is that credit companies provide you with a due date to clear balances. Anytime before this date is your grace period. If you clear your dues before the due date arrives, you won’t have to pay any interest. However, if your balance is pending, the interest rate is compounded every month. This cycle leaves you with an ever-increasing pile-up of debt.

Unlike credit card rates, personal loans do not require intricate calculations for determining the interest. This makes it a more convenient option for securing credit too. Also, credit cards tend to have variable charges that depend on fluctuating parameters. Whenever the parameter increases, your variable interest may also go up. It makes your charges subject to a lot of changes that you may not understand or control. But with other loans, your interest rate is usually fixed and decided at the outset. This implies that your repayment will also be fixed and consistent with the terms of the loan.

What are the Best Loans to Pay Off Credit Card Debt?

Borrowers usually have access to a variety of loans to clear credit card debt. The trick is to understand these different options so that you choose the one that gains you the most.

The best loans to pay off credit card debts are the ones that fit your unique situation. Payday loans can be easier but personal loans have the possibility of a lower interest rate. So there’s no objective one-size-fits-all option. Each alternative serves its purpose best, depending on your situation. Let’s get a closer look at the options that are typically available to the average borrower.

Refinance with a Credit Card

To clear your credit card dues, a balance transfer credit card can prove to be a sensible option. With this option, you can move your existing balance to a new credit card with a lower interest rate. The right transfer may even allow you to go interest–free for the first year or even up to 18 months.

Credit Card Consolidation

To consolidate your credit card dues, you can use an unsecured loan to mobilize all the separate debts from your cards. The loan can be arranged from a bank, credit union, or online lender. Whichever source you get it from, it will work with an overall lower interest rate than the combined interest rates of the credit cards.

A Line-of-Credit or Home Equity Loan

Another option is to secure a loan or line-of-credit based on the equity in your house. To take this route, you would have to be a homeowner, of course. But it can be a viable way of paying off those dreaded debts on your credit cards. The advantage here is that you stand a chance to enjoy a lower rate of interest since your home secures the loan.

Debt Management Plan

Debt Management Plan is also a form of consolidating debts, but it works even for debtors with a bad credit score. There are credit counseling organizations that can lend you expertise and assistance in chalking out a plan. It works by consolidating your credit card dues into a monthly plan that fits your income. However, if you cannot repay your debts in 3-5 years, it may be better to declare bankruptcy.

Best Secured Loans – The Requirements

Secured loans require you to put up collateral against the loan that you receive. This makes it a more stable and reliable form of borrowing. To ensure a secured loan, you’ll have to produce:

  • Proof of Age – Loans are only given out legally to those over the age of 18. You’ll have to submit a proof of age
  • Stable Income – A consistent and stable income is a crucial part of a secured loan. If you don’t want to lose your collateral later, your regular income should be able to accommodate the monthly payments.
  • An Active Bank Account – It helps if you have a bank account that is alive with frequent transactions. This activity shows that you can meet minimum payments and still be able to cover other charges.
  • Proof of identity – The lender will most likely request a valid name, identity, and email address.
  • Proof of income – Your income and its source have to be verified to the lender. A pay stub works well for this situation because it gives you the monthly breakdown of your income.

Debt Consolidation – A possibility

Debt consolidation remains one of the best loans to pay off credit card debt. It’s one of the most sought-after strategies for clearing multiple debts because of its practical nature and reasonable terms. There are several reasons why debt consolidation works so well in this situation.

  • You can streamline your payments into a single easy-to-manage debt. This consolidation is much more convenient than keeping track of multiple smaller debts.
  • Consolidating debts can also give you better interest rates. Credit card rates are normally on the higher end, while personal loans for debt consolidation can be more cost-effective.
  • With timely payments, consolidated debt can boost your credit score better than smaller scattered debts.

Personal Loans can save you

Personal loans have been one of the most significant sources of bailing out debtors with credit cards. They are among the best loans to pay of credit card debt because they offer much better terms.

With credit cards, interest rates are always much higher than with a personal loan. This is mostly because it allows you o spend money you do not currently have. Also, if you’re indulging in cash advances with your credit card, your finance charges will go up through the roof. This results in a low credit score, which worsens your interest potential. The cycle just continues till you’re fully debt-ridden.

On the other hand, personal loans offer much more variety in choice and implementation. Even if you’re considering debt consolidation, it has to come from some sort of personal loan. Also, with a personal loan, you have a much more manageable and convenient way of clearing your dues. They come with minimum payments that you can clear regularly. And it’s simply a more refined and rational way of paying off your credit card debts.

What to consider before applying for a loan

Applying for a loan is a serious affair, and it demands specific responsibilities from you. If financial mismanagement is what brought you into debt, it is financial diligence that will take you out. Here are some basic but crucial things to consider before applying for a loan.

  • Types of loans – You have to be aware that there are different categories of loans available – personal loan, auto, payday, line-of-credit, etc. Depending on your credit history and management plan, you need to choose the one that fits you the most.
  • Interest rates – With loan interest rates, less is always more. Get yourself a loan with lower interest rates so that your debts are cleared in time. Consider what other charges may appear in addition to interest rates. Personal loans usually have a lower rate than others.
  • Bad Credit – With a bad credit you reduce your possible loan options and may also give you a high interest rate.
  • Duration of the loan – The period of the loan will determine the minimum payments and the total amount you end up paying.
  • Survey and scan – Try to get a fair understanding of all the available options. Once you have covered all the possibilities, you will be better informed in making a choice
  • Assess your ability – Check if the loan fits into your financial management plan. This includes your ability to pay back the loan under the stipulated conditions. Do not bite off more than you can chew.

Summary

Multiple credit cards with high interest and maybe also high monthly fees is not something to stick on to. Instead it is our recommendation that you try to get a personal loan to pay off credit cards as soon as possible if you are in this situation. Replacing the credit cards with a personal loan will improve your credit score but also lower your monthly payment amount or shorten your loan term.

Quick Stats

Highest AmountLifeLoans - $40,000

Loan Terms up toQuickLoanLink - 7 years

Recommended income$2,000+ per month

Grace Chen
Article written by

Grace Chen

Grace Chen has 10 years of experience in the financial field and have been delivering excellent business content through her articles.

Grace graduated from the Haas School of Business, University of California and is currently the chief editor of Communicate Better where she has written and edited thousands of articles published in various media.