If you want to consolidate credit card debt, and right your financial life ship, then you may want to consider a credit card loan (also known as a personal loan) to consolidate credit card debt, lower your interest rate and lower your monthly payment.
What Is A Credit Card Loan?
A credit card loan is an unsecured loan typically from $1,000 – $100,000 with fixed or variable interest rates at are used to consolidate credit card debt and lower your current interest rate. A credit card loan is a short-term loan that is typically repaid in 3-5 years, and offers a monthly repayment feature that includes both principal and interest.
How is a credit card loan different from other types of loans?
First, a credit card loan is an unsecured loan.
An unsecured loan means that there is no collateral attached to a credit card loan.
For example, if you borrow a mortgage, your home becomes the collateral for your mortgage. If you default on your mortgage, your lender will then own your home.
With a credit card loan, there is no underlying collateral if you want to consolidate credit card debt.
When a loan has no collateral, it means that the loan is an unsecured loan. Since the lender assumes more risk with an unsecured loan, the interest rate on a credit card loan is higher than the interest rate on a mortgage.
How A Credit Card Loan Helps You Save Interest When You Consolidate Credit Card Debt
If you want to consolidate credit card debt, a credit card loan helps you cut the interest rate on your existing credit card debt.
A credit card loan combines all your existing credit card debt into a single credit card loan with one monthly payment. When you consolidate credit card debt, the resulting interest rate is equal to the a weighted average of your existing credit card.
The good news is that interest rates on credit card loans are often much lower than the interest rates on credit cards, which typically range from 10-20%.
This means that you can use a credit card loan to lower your interest rate and lower your monthly payment, which can help you consolidate credit card debt and pay off your debt more quickly.
When Should You Use A Credit Card Loan To Consolidate Credit Card Debt?
The best part about a credit card loan is that you can use it at your discretion on the financial decisions most important to you.
Unlike a student loan or mortgage, which must be spent on school or a home, you decide how and when to spend your credit card loan.
Credit card debt consolidation is your intended use to consolidate credit card debt, but you do have discretion to use your credit card loan for other purposes.
Should You Use A Credit Card Loan To Consolidate Credit Card Debt?
If you have credit card debt and want to lower your monthly payment and interest rate, then you should consider a credit card loan to consolidate credit card debt.
A credit card loan enables you to consolidate credit card debt and organize different monthly payments more easily.
When you consolidate credit card debt, you combine your existing credit card debt into one credit card consolidation loan, which has one monthly payment.
If you have existing credit card debt, you also might be able to obtain a credit card loan at a lower interest rate than your existing credit card interest rate.
Today, the average credit card interest rate is 16.5%.
For example, if you have $10,000 of credit card debt at 14% interest and can obtain a credit card loan at 6% interest, you could potentially cut your interest payments by more than 50%.
With no origination fees and no prepayment penalties, you can save on fees and pay off your credit card loan faster.
With the help of technology, you can learn your new rate online within minutes. Plus, technology has lowered the fees for a personal loan, which means more money in your pocket and less in theirs.
Best Credit Card Consolidation Loans For 2018
Overview
| Minimum Loan Amount: | $5,000 |
|---|---|
| Maximum Loan Amount: | $100,000 |
| Loan Terms: | 3, 5, 7 years |
| Minimum Income: | $50,000 |
Details
| Origination Fees: | No |
|---|---|
| Late Fees: | No |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $1,000 |
|---|---|
| Maximum Loan Amount: | $45,000 |
| Loan Terms: | 3, 4, 5 years |
| Minimum Income: | No |
Details
| Origination Fees: | No |
|---|---|
| Late Fees: | No |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $1,000 |
|---|---|
| Maximum Loan Amount: | $50,000 |
| Loan Terms: | 3, 5 years |
| Minimum Income: | $12,000 |
Details
| Origination Fees: | 0% - 8% |
|---|---|
| Late Fees: | Greater of (a) 5% of payment due or (b) $15 |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $2,000 |
|---|---|
| Maximum Loan Amount: | $35,000 |
| Loan Terms: | 3, 5 years |
| Minimum Income: | None |
Details
| Origination Fees: | 1% - 5% |
|---|---|
| Late Fees: | Greater of (a) 5% of payment due or (b) $15 |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $1,000 |
|---|---|
| Maximum Loan Amount: | $40,000 |
| Loan Terms: | 3, 5 years |
| Minimum Income: | None |
Details
| Origination Fees: | 1% - 6% |
|---|---|
| Late Fees: | Greater of (a) 5% of payment due or (b) $15 |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $2,000 |
|---|---|
| Maximum Loan Amount: | $50,000 |
| Loan Terms: | 1, 2, 3 years |
| Minimum Income: | None |
Details
| Origination Fees: | No |
|---|---|
| Late Fees: | No |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $5,000 |
|---|---|
| Maximum Loan Amount: | $35,000 |
| Loan Terms: | 2, 3, 4, 5 years |
| Minimum Income: | None |
Details
| Origination Fees: | 2% - 5% |
|---|---|
| Late Fees: | No |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $1,000 |
|---|---|
| Maximum Loan Amount: | $50,000 |
| Loan Terms: | 3, 5 years |
| Minimum Income: | None, but must have at least $1,000 per month of free cash flow |
Details
| Origination Fees: | 1% - 5% |
|---|---|
| Late Fees: | $10 after 15-day grace period |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Overview
| Minimum Loan Amount: | $2,000 |
|---|---|
| Maximum Loan Amount: | $35,000 |
| Loan Terms: | 3, 5 years |
| Minimum Income: | None |
Details
| Origination Fees: | 0.99% - 5.99% |
|---|---|
| Late Fees: | $15 |
| Prepayment Penalty: | No |
| Soft Credit Check: | Yes |
Make Lemonade is not a lender, broker or investment adviser. We are a free, independent and unbiased website to help empower you to make more informed financial decisions. The rates and terms contained herein are estimates, net of autopay (if applicable) and may change at any time and/or differ from your final rate and terms. For disclosures from SoFi, please click here. For more information, please see our Advertiser Disclosure.