You shop online, pay by credit card and the next thing you know, a large credit card bill shows up in the mail. Almost immediately, you’re stressed out wondering how you’re going to pay the bill in full – or worse – keep up with the 19.99% interest being tacked on to the balance. Last year, I spent $19,000 on clothing through online shopping. It’s happened a few times in my life and on occasion, my only solution was to pay the hefty 19.99% credit card fees on the outstanding balance. But what if you had options?
There are other solutions and the good news is if you have good credit and are ready to face your debt, you have options. One of those options is getting a loan. It’s great if you have a high-interest credit card carrying a balance, or have multiple cards and want to consolidate to pay down your debt.
If you have good credit and need to consolidate, it’s easy to get a loan in minutes for debt you currently have. You’ll be able to roll all your debt into a new, larger loan at one low-interest rate you pay each month.
You’ve done too much online shopping, now what?
You’ve done too much online shopping, now what?
Face The Facts
Do you know how much you owe and how many lenders you owe money to? Facing your debt facts is the first step to consolidating your debt into a loan. Statistics Canada says the debt-to-income ratio of Canadian households stands at 163.3 per cent. That means for every dollar Canadians earn, they owe $1.63 in debt. That’s a good reason to consolidate and pay it off. The first step is to get a credit report and check your credit score. Your credit report will show all your current debts from all lenders. Once you have this information, write down the interest rate you’re currently paying beside each one. Knowing your interest rates is important for the next step, applying for a loan.
Apply for a Debt Consolidation Loan
Consolidating your debt into a loan will reduce the interest rate you’re paying but will not eliminate your debt. It’s simply a solution to reduce the amount of interest you’re paying and to help you pay the loan off faster.
Writing down your rates is a helpful exercise for you to understand what rates you are currently paying. This will help you when it comes time to apply for a loan to ensure you’re paying a lower interest rate.
Did you know you could apply for loans through sites like Borrowell in minutes and have your loan in 48 hours? Yep. It’s simple and easy. No more 2-week waits with a bank to be told you have to drive to a branch to sign off on paperwork. Who needs that nonsense? Believe me, been there, done that.
The best part in applying for a loan with Borrowell? No hard inquiry on your credit report, which means no impact to your credit score. Nice!
Quick tip: Once you open a debt consolidation loan, consider closing those high-interest credit card accounts, reducing the credit limits or lock them away. Be careful how many you close at once as it can negatively affect your credit score!
Pay it Off Quickly
Consolidating debt with a loan is a great way to reduce your interest rates and will allow you to put more money toward the principal. Now that you have a loan, the key is to stop shopping, lock away or cut up your credit cards and get laser focused toward paying back the debt. You may also want to find your “why”. Why do you want to be out of debt? Do you want to achieve financial freedom? If so, this can be a great motivator and goal to focus on during your debt repayment. You’ll stay focused and eventually you’ll be debt free.
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