Start Consolidating credit card debt into a personal loan

Consolidating credit card debt into a personal loan

Before discussing how it could help your credit score, let’s review the non-credit perks of consolidating credit card debt.

With a personal loan you’ll have just one repayment to make every week, fortnight or month over a set term – you can usually choose your own frequency of repayments.

And if the interest rate on the personal loan is lower than your credit card rates – and they often can be – this can help you get ahead in reducing your overall debt.

If you’re not sure how consolidating your credit card debt will affect your score, take a look at the details below – the Nerds will tell you everything you need to know!

Rolling multiple credit card debts into a single consolidation loan has a lot of important benefits.

Dealing with debt on multiple credit cards is stressful, which is why many people consider consolidating their several debts into one.

There are a lot of benefits to this move, including the potential to give your credit score a boost.

If you have three different credit cards with debts of, for example, $3,000, $4,000 and $7,500, you’re likely to also have three different interest rates and to be making three different repayments at different times each month.

This can feel overwhelming and complicate managing your cash flow.

Instead of just having to make minimum repayments as you do on credit cards, you’ll have to make set repayments that cover both the loan amount and interest, which you know will end at a certain date.

You can choose to lock in your interest rate with a Fixed Rate Personal Loan, or enjoy the flexibility of making extra repayments and clearing your debt sooner with a Variable Rate Personal Loan.

This is because, in doing so, you’re quickly reducing your credit utilization ratio.