Are credit card bills starting to make you anxious? You're not alone -- the average U.S household carries $16,425 in credit card debt. Or maybe you've recently had a card with a low-interest increase, and you want to find something that's more financially prudent. It may be time to consider a signature loan.
A signature loan is a type of personal loan that doesn't require collateral. It's usually for an amount under $35,000, and you'll have to qualify based on your income and credit score. Assuming you can qualify for a signature loan, here are three reasons to get one to consolidate your debt.
1. You can make one payment instead of several.
If you miss a payment on just one of your credit cards, you'll probably be assessed a significant late fee. Sometimes your interest rates can also skyrocket. Instead of needing to keep track of the due dates and amounts on several different accounts, get a signature loan and make just one monthly payment. You can usually even set it up so the payment is made automatically out of your checking account on a set day each month.
2. You can get rid of most or all of your cards.
If you're working on reducing debt, it's a good idea to not have credit cards around that you might use on a whim. You can pay off your credit cards with the money from your signature loan, cancel your card accounts and carry a debit card for making convenient, everyday purchases. Then, you'll be able to make regular payments on the signature loan and get your debt -- and spending habits -- back under control.
3. You can pay more toward principal.
With lots of different accounts, you're going to end up paying more in interest than you would if all your debts were grouped into one loan. With just one loan, you'll be putting more toward the borrowed amount and less toward paying interest fees.
When should you not consider a signature loan? There are really only three reasons: You don't quality; you can't make the payment each month or the only interest rate you can get is too high. In the latter case, a high-interest rate may not end up being less than your assorted credit card accounts, so be sure to do the math. If you have questions about signature loans and what amount you might qualify for, contact an established lender.
Contact a company like Las Vegas Finance for more information and assistance.
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