Should You Get A Loan To Pay Off Your Credit Card Debt?｜Personal Loan｜EMVertex Credit

-
960x0.jpg​
As a financial planner, this is a question I am asked frequently. Often people consider getting a Home Equity Line of Credit (HELOC) or a personal loan to consolidate their credit card debt. Debt management is one of the biggest causes of stress for many people, so it’s understandable that those drowning in debt are looking for a solution. But...is this the right one? People seem to think this is an easy solution to their credit card problems, but there is no silver bullet. You still have your debt, you are just paying it off differently. Here are three things to consider before making this move.

Will you continue to rack up credit card debt?

This is number one for a reason. The most important thing to consider is whether or not you will actually change your debt behavior and habits. If you have high credit card debt because of a one time home improvement project, or a year where you were building a business - then your debt may be circumstantial and not due to a habit of overspending. Too often I see people who get a HELOC or personal loan to pay off all their credit card debt, only to continue racking up debt on their cards. If the behavior doesn’t change, you can end up in double your original debt - your loan plus the new credit card debt you recently added. This problem partly stems from the feeling of relief behind paying off your debt. All the sudden, you feel like you have ‘extra’ money to spend. Remember that this is not free money, and it’s not ‘your’ money. So before you get the loan, make a plan for success. Cut up all your credit cards, or make a rule that they are only for emergency. No one plans to rack up high credit card debt; it starts small and adds up so you must be vigilant. If you don’t plan to change your spending habits, do not even bother reading any further. This is not the solution for you. Do not pass Go. You will thank me later.

Will you save money?

If you have a credit card with a 28% interest rate, and you can get a loan with a 6% interest rate - odds are you’re going to save money by transferring your debt. But there are other things to consider. HELOCs generally have variable interest rates. The interest rate is based on a benchmark rate, such as the Fed funds rate, plus a margin, which is established by the lender. When interest rates go up, your monthly payment will go up. So make sure you understand the terms of your loan. Also, often the reason these options are appealing is because it extends your repayment terms to as many as 30 years, making your monthly payments smaller. However, the overall cost of your debt may increase even if your interest rate is significantly lower because you will be paying interest for a longer period of time. Use an an online debt consolidation calculator to compare the total amount you will pay.

Will it help you make payments?

One of the worst things you can do to your credit score is miss payments, or make late ones. When someone has multiple cards with multiple payments, it can be hard to keep track and sometimes payments are missed. A debt consolidation loan can be hugely beneficial in these situations by reducing your payments into one easy amount. Or, your credit card minimum payment may be so high that you simply can’t afford to make it some months. Again, getting a loan that allows a smaller, more manageable monthly payment may be a good option for you.

Will you continue to rack up credit card debt?

It’s worth listing again. In case you don’t remember from #1, if you think there is the tiniest of tiny chances you will be right back where you started with credit card debt, don’t use a loan or HELOC to pay off your credit cards. None of these benefits - lower interest rates, smaller monthly payments and convenience of one payment - will matter. You will end up with double the debt and much worse off then you are now. So be honest with yourself.
If you’ve read this article and you think this option is probably not right for you - you’re smart to realize this now. The first step is to change your spending and ‘debting’ habits. Once you’ve identified and are working on the problem, make a plan to get aggressive with your debt. You have two options to reduce your debt faster. One option is to cut from your budget, and allocate that amount to your credit cards. Another is to get a side gig, and put every cent you make there towards your debt payment. No silver bullet, but it can be done.
Via:Forbes-News
​

Contact Us

ADDRESS▼200 Jalan Sultan #02-33, Textile Centre Singapore 199018
PHONE▼6291 6868
EMAIL▼enquiry@emvertex.com
FAX▼(65) 6293 9018
WORKING HOURS▼Monday – Saturday : 11am – 7pm

Request immediately: EMVertex Credit

留言

張貼留言

這個網誌中的熱門文章

A Quick Guide Through Holiday Loans｜Personal Loan｜EMVertex Credit

-
圖片
Are you finally ready to treat yourself to the popular Turkish ice-cream vendors or just devour the famous Pho in Vietnam, watching the sunset in the backdrop? Dreams are bliss, and thankfully these days, you can actually live them. The new generation today, is aware of how easy it is to manifest their travel dreams in reality whether they have saved or not! The internet and technologies have also made all the processes right from planning to finances simple and accessible. If expectations are not met at the speed of their thoughts by one organization, it is easy for them to move onto the next option. No one understands this better than e-commerce platforms, which offer multiple customized products to them. Even digital NBFCs have tailor-made loan products to meet their growing demands. Travel is no longer a trend, It’s a necessity for millennials. It provides them with enriching experiences, transforming their outlook towards their lives and careers. Families and managers,...
閱讀完整內容

Know When To Part Prepay A Home Loan｜Personal Loan｜EMVertex Credit

-
圖片
  If you have a home loan, it is possible that you might have faced the dilemma at least once whether to make part prepayment of your home loan or invest that extra sum you might have received as your bonus. As home loan is generally one of the biggest loans one might avail of during the lifetime, and there is no prepayment penalty, you would want to get rid of it as soon as possible and be debt-free. However, making the decision whether to make part prepayment or invest the sum is not that easy in case of home loans because there are multiple factors that you need to consider, including the rate of interest on loan, remaining tenure, rate of return from the investment, tax benefit forgone on interest and principal repayment, among others. However, there are certain situations when it is advised to make the part prepayment rather than investing. Let’s explore them. Rate of return is lower In case you are planning to prepay your loan, you first need to calculate the opportunity cost...
閱讀完整內容

Is it possible to redecorate that house and have enough

-
圖片
photo to  erares mortgage 1. I am a youth group, recently bought a new house, but have not enough money. I want to create our own dream home. How to successfully apply for a loan to decorate and relieve me of the packaging cost? 2. Out of the high house of age, the whole house condition is very poor, want to overhaul and replacement of old equipment, such as: sanitary ware, tile, water pipes, etc., the budget of the project cost is quite high. How to get the smart loans and have more abundant fund use? Photo to pixabay Object: 1.Young people who want to buy second-hand housing 2.People who have the old house and want to overhaul 3. People who want to change the pattern of old equipment 4. People who don't have enough cash We provide high-quality service to help you successfully bid for renovation loans. Through EMVertex Credit Singapore's latest renovation loans, and build your dream home. Through EMVertex Credit Renovation loans to enjo...
閱讀完整內容