When you are deep in debt, the opportunities to dig yourself out may seem overwhelming. It’s easy to fall victim to debt solutions that can put you in an even worse position. Thankful for those with a good enough credit score, there are available personal loan options that can be much better than many other alternatives.
Having a personal loan for debt consolidation could significantly lower how much you pay in interest. Personal loan rates are generally lower than credit card rates, so consolidating could save you hundreds or even thousands of dollars in interest payments.
Having a personal loan to reduce debt can have a few benefits. When you receive a personal loan, you open up a new installment credit line and, if you use it responsibly, you can increase your credit rating. A debt consolidation loan via https://dedebt.com/ can help you clear your debt faster and get you back on track.
Additional options for debt consolidation
For credit card consolidation, personal loans are our top pick. However, they are not the only option when it comes to debt consolidation. If you do not have a large amount of debt, a balance transfer credit card could be a good fit.
Also, disbursing funds from your retirement account could be an option that you should consider. Of course, you can also rely on friends and family if your debts are a little more manageable. Here are just a few debt consolidation options to consider, along with the proven personal loan.
Balance transfer credit card
Professionals: Some balance transfer credit cards offer more than a year of 0% interest. In most cases, that’s more than enough time to get your debt under control.
Disadvantages: There may be some balance transfer cards associated with a small transfer fee. You should be aware of this when buying a ticket.
It may seem strange to tackle credit card consolidation with another credit card. However, a balance transfer credit card could be a faster and easier solution if your credit card debt is manageable.
Balance transfer credit cards work by giving you a place to transfer an outstanding amount. This is usually a bounty that looks at many of these cards, come with a 0% interest period. For example, say you’re paying $ 1,000 credit on a card and are not making any progress with the current interest rate.
You could transfer this balance to a balance transfer credit card with 12 months interest of 0%. Then you would be able to reduce that balance while you have a whole year without interest.
Withdraw money from your retirement savings account
Professionals: It’s your money, which means you do not have to show proof of good credit.
Disadvantages: This could lower your retirement savings and you could be affected by the prepayment penalty mentioned above. In addition, you may not be able to take out the entire fund in a lump sum, which may not be helpful to pay off a larger debt.
If you have a 401k or IRA, you might be able to draw emergency funds if you need money in a pinch. Unfortunately, there are potential implications to consider.
It can be a bit difficult to tap your pension fund. If you are under the age of 60, then you could be met with a penalty for early withdrawal. This alone could greatly deplete the funds you had in your account and make things harder when the time comes to retire.
If you can avoid using your bond funds for debt consolidation then you should do it. Especially since in most cases, the money you hold in your 401k is protected from creditors.
Borrow from friends and family
Professionals: Your best friend or family member will probably not charge you interest and you do not need a proper loan.
Disadvantages: Be careful, as this has the potential to make a big difference in your relationship. Pay attention to clear, open communication to avoid broken trust and hurt feelings. In a word, transparency.
It can be difficult to reach friends and family if you need financial help. In some cases, it is even the last resort. It does not have to be that dramatic.
After all, your loved ones should be there for you in good times and in bad. It is perfectly reasonable to rely on your friends and family when you are in a financial dilemma. Just make sure you are approaching this transaction like a real lender.
Compile a detailed plan detailing how much financial support you need. Include your income and give your loved ones an idea of how long it will take to repay them if they decide to help. Make sure you receive everything in writing so everyone has reasonable expectations.