Credit Card’s Payments

Though
the flexibility credit cards provide is undoubtedly useful in normal
situations, you can easily feel tempted to reduce the amount of money
you destine to pay your credit card balances and use it for other
expenses. Since credit cards let you pay only a small portion of the
balance, the temptation is big but doing so can bring many problems to
your financial health.

The interest rate charged for credit card
financing can be as high as 25% on an annual basis. Such a high rate, if
the balances remain unpaid, implies high amounts of money on interests
that keep being added to your debt. If you pay only the minimum this
situation is aggravated because eventually as your debt increases, you
won’t be able to pay the minimum and when that happens, you’ll incur in
penalty fees that will increase your debt even more. Moreover, due to
the delinquency, the credit card company will increase the interest rate
charged and you will enter into a vicious circle of debt.

Unsecured Personal Loan’s Installments

A
solution to this problem is to obtain an unsecured personal loan in
order to cancel the credit card balances in full. Unsecured Personal
Loan’s Installments have many advantages over regular credit card
payments that turn them into an excellent option if you wish to take
control over your debt and start repairing your credit.

For
starters, the interest rate charged for unsecured personal loans is
significantly lower than the interest rate charged for financing unpaid
credit card’s balances. While unsecured loans carry interest rates that
range from 7% to 16%, Credit Card’s rates can reach up to 25% and are
almost never lower than 14%

Moreover, while the minimum payments
on credit cards are variable and include little principal, the unsecured
personal loan’s monthly payments can carry fixed rates and thus be
equal throughout the whole life of the loan. Besides, the monthly
installments include interests and principal as well so you’ll be
continuously reducing your debt by repaying the loan.

If you are
smart enough to get rid of most of your credit cards but one or two
after you repay the balances and refrain yourself from using them for
unnecessary expenses, then your unsecured loan installments will also
contribute to stopping the vicious circle of debt and start a virtuous
circle of debt elimination. That way, you’ll be able to gain control
over your finances again.