• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

National Debt Relief

National Debt Relief - A+ BBB Accredited Business - Get Relief From Credit Card Debt, Medical Bills And Unsecured Loans

Talk to a debt counselor toll free:

800-300-9550

Get Relief From Credit Card Debt

Medical Bills and Unsecured Loans

  • Apply Now
    • Qualifications
    • Is This Right For Me?
  • Proven Results
    • Debt Relief Benefits
    • Credit Card Debt Relief
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Login
HomeBlog LoansThe Pros And Cons Of Personal Loans And Debt
Video Transcript

Free Debt Consolidation Quote

By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
  • National Debt Relief, LLC BBB Business Review
  • McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

The Pros And Cons Of Personal Loans And Debt

November 21, 2018 by Adam Tijerina

learn about the pros and cons of personal loans
woman with calculator figuring out the pros and cons of personal loans

If you have credit card debt, you’re probably worried about getting it paid off. However, if you’re like many Americans, while your intentions are good, you just can’t seem to get a handle on your finances. Most Americans carry a significant amount of credit card debt. The average balance on credit cards held by a consumer is $6,348.00, according to Experian. While Americans are finding themselves in better shape financially than they have been in the last decade, credit card debt remains a stubborn problem for the average consumer. Revolving debt is continuing to rise, despite a roaring economy, fat 401(k) accounts, and rising wages.

Is a Personal Loan Right for You?

Many debt-strapped Americans have turned to personal loans as a way to consolidate their debts. This is a viable option if you can qualify for a good interest rate. With a lower interest rate, compared to the high rates of credit cards, you could save quite a bit each month. Unfortunately, qualifying for a rate that makes it worthwhile may prove difficult for those with high levels of debt, as they likely have already taken a credit hit.

Before applying for a personal loan, consider all aspects. You can obtain a personal loan from a bank, a credit union, or an online lender. How much you’ll qualify for will depend upon the type of lender you choose, your credit score, your income, and other factors.

Generally, you can get a personal loan ranging in amounts from around $1,000 up to $35,000 or more if you have excellent credit. If your credit card debt is high and you’re unable to secure enough loan proceeds based on your credit, you may have to apply for a secured loan instead, which puts your assets at risk. The payback period for a personal loan is usually 3-10 years.

Another drawback of a personal loan is that most lenders charge an origination fee to write the loan, which can be up to 10% of the loan amount. You’ll need to consider this added expense when determining if a personal loan is the way to go. Thankfully, you do have other options for reducing an excessive debt load.

Balance Transfer Credit Cards

One way to consolidate credit card debt is to transfer the balances to a single card that offers a 0% introductory offer. If you choose to go this route, make sure you’re aware of how long the introductory period lasts, as carrying a balance past that date could result in retroactive interest being applied, and the new rate after that period is likely to be extremely high. Additionally, be aware that some transfer cards charge a fee in the 3-5% range to process the transfers.

Using a Debt Consolidation Loan to Pay Down Your Debt

One of the advantages of a debt consolidation loan is that, unlike credit card debts, it has a fixed payment and a defined repayment period. Most have terms between three and five years, giving you a target date of when you’ll be free from debt. The repayment structure of credit cards is inherently built to lure consumers into the minimum payment trap, ensuring they carry a balance virtually forever. A debt consolidation loan frees you from this. For many, though, the higher payment with a consolidation loan is too much too handle, in which case debt settlement is a better option. A trusted financial partner will work with you to accrue money in an account that it uses to pay off your debts at a fraction of their balance.

Evaluate Why You Got into Debt

Before agreeing to any type of loan, take time to evaluate how you got into trouble in the first place.

  • Were you hit with an unexpected medical bill?
  • Did a wage earner lose a job?
  • Were you living beyond your means?

No matter the answer, it was probably avoidable, either by having an emergency fund to get through times or by monitoring your spending a bit better. When the monthly cash flow is unable to cover bills and expenses, consumers turn to credit cards to fill the gap, and this is when trouble arises.

This is a good place to emphasize the importance of having a budget. Sit down with your family and devise a plan to cover your expenses each month without turning to credit, hopefully with a bit of money left over that you can then divert to an emergency fund.

Moving Forward

In the grand scheme of things, a personal loan is rarely the best choice. Those with high levels of debt are likely already behind the ball in terms of credit, meaning they’ll be unable to secure a rate that saves much money. Many have to turn to a secured personal loan, which could put a home or car at risk if they’re unable to fulfill your obligation. For many, the ideal choice isn’t a debt consolidation loan, but one of many other options, like debt settlement. Before you decide to take out a loan, make sure to explore all your options.

Do you qualify for debt consolidation?

Adam Tijerina
Adam Tijerina

Adam Tijerina is a personal finance expert for National Debt Relief, a BBB A+ accredited business offering debt settlement services since 2009. Adam knows a thing or two about debt resolution after successfully settling $43,250 in credit card debt on his own. He has also co-authored two books about overcoming adversity and has been featured on Credit.com and USNews.com. Adam holds a Bachelor’s Degree from Trinity University and lives in Texas with his wife and four children.

Follow Adam Tijerina: Linkedin

Primary Sidebar

Consolidate Your Debt!
Find out how NDR could help.
  • Get one low monthly payment
  • Avoid bankruptcy
  • Get out of debt in 24-48 months
Get Your Free evaluation
Free Debt Consolidation Quote
By clicking "Get Free Quote", you agree that the phone number you are providing may be used to contact you by National Debt Relief (including autodialed and prerecorded calls, as well as text/SMS messages). Msg. and data rates apply, and your consent to such contact is not required for purchase.
 Trusted By Our Clients

"Great Service"

Eric was great to work with. He explained the program in full detail, making it an easy decision to decide to enroll in the program. I would recommend anyone who is looking to get their finances in order to National Debt Relief.

Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating Trustpilot star rating

Ryan Danielson
ConsumerAffairs Reviews

Latest Loans Posts

  • 10 Terms to Know When You’re Confused About Personal Loans
  • 4 Business Loan Options for When You Have Bad Credit
  • Tips To Pay Off Your Home Loan Earlier Than Expected
  • How Do Taxes Work With Money Borrowed From My 401(k)?
  • What Trump’s New Policies Mean For Payday Loans
National Debt Relief, LLC BBB Business Review AFCC Top Ten Reviews Gold Top Consumer Reviews Consumers Advocate Trust Pilot
Company
  • About Us
  • Contact Us
  • Blog
  • Careers
  • Corporate
  • Privacy Policies
  • Terms Of Site
  • Disclaimer
  • Sitemap
Products
  • Debt Relief
  • Credit Card Debt Relief
  • Debt Consolidation
  • Debt Settlement
  • Calculators
  • FAQs
Debt Resources
  • Credit Card Debt
  • Bad Credit
  • Medical Debt
  • Personal Loan Debt
  • Unemployment
  • Divorce Debt
  • Retiree Debt
  • Veteran Debt
  • Business Debt
  • Personal Finance
Follow Us
  • Facebook
  • Twitter
  • Linkedin
  • Instagram
  • Pinterest

© 2021, National Debt Relief, All Rights Reserved.

Disclaimer
Disclaimer
Disclaimer