If you’re considering consolidating your debts, you’ve probably come across the terms “debt consolidation loan” and “balance transfer credit card”. They are two proven approaches to reducing personal debts, offering a single monthly repayment.
But which is best for your personal circumstances? Read on for information on debt consolidation loans and credit card refinancing, so you can assess the merits of each and choose the best solution for you.
Otherwise known as personal loan transfers, debt consolidation loans are designed to move your debts into a single loan, with only one monthly repayment to make over a fixed period of time of usually three to five years.
Debt consolidation loans usually offer a lower interest rate than that of standard credit cards, store cards and many personal loans.
An alternative to a debt consolidation loan is to transfer your current debt onto a new credit card that has a significantly lower interest rate than your current credit accounts. They are usually called balance transfer credit cards, and work by offering a promotional period of 6 – 24 months, during which time the interest rate is low for the debts transferred.
Usually, a balance transfer credit card is used to consolidate credit card debt only, however there are some that accept personal loan debt also.
Both of the above debt relief solutions have their merits, and are proven approaches to helping individuals reduce the debt they owe, as part of a broader financial plan.
By comparing the benefits of both debt consolidation loans and credit balance transfer credit cards, and applying their suitability to your own personal circumstances, it will hopefully become clear which debt solution is best for you.
But if you’re still feeling unsure, a great next step would be to seek free financial advice from a debt relief solution provider, who can assess your finances and provide you with tailored advice.