Don’t use personal loan for credit card debt

Posted by administrator | 29/12/11 | Tagged Credit Card Debt

Don’t use personal loan for credit card debt
News from Yahoo Finance:

Dear Debt Adviser,
Is it wise to get a personal loan of $ 17,000 to wipe out credit card debt? The cards have a maximum interest rate of 11.2 percent and my income is approximately $ 100,000 annually before taxes. I don’t have a mortgage.
— Ira

Dear Ira,
Your credit card debt would not be “wiped out” with a personal loan; it would simply be shifted to another type of debt using a different credit instrument. Sort of like rearranging the deck chairs on the Titanic, your actions wouldn’t materially change what’s going to happen, although in your case it might make it worse. Here’s why: Many personal loans have a payback period of no longer than 60 months, or five years. Credit cards tend to amortize your payment over eight to 10 years, resulting in a lower payment over a longer time. While many personal loans use a fixed rate, you ca…………… continues on Yahoo Finance

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