Should I pay off my credit cards with a personal loan?
Absolutely not! More often than not when people use consolidation loans to eliminate their credit card debt they fall deeper into debt. The issue with these loans is that people keep their credit cards after the credit card has been paid off. This leaves them vulnerable to maxing it out all over again. Now they end up with a new term loan and once again a maxed out credit card. This creates a black hole of debt that I don’t want you to go down.
Why does this happen so often?
When you pay off your credit card with a term loan you are fixing the symptom and not the root cause of the problem. The problem with credit card debt comes from the habits you have developed that keeps you adding more and more to the card every month, even though you want to stop. These habits include always justifying a purchase you make on the card you know you shouldn’t. These excuses range from I need this for my kids to what’s another $20 on this massive bill. If you can fix this habit first you’ll be well on your way to getting out of debt. Remember you must first stop the bleeding before you can start the healing.
You want to pay it off with a loan anyway
If you do choose to pay off your credit card with a low interest fixed rate loan you must DESTROY and CANCEL your credit card. Because if you don’t you will use it again. By using this quick fix to pay off your credit card you miss out on developing the discipline of not using your credit card. This is why you must destroy and cancel the card. Now, you’ll be in a situation where you won’t be tempted to use it again.
Bottom Line: Paying off your credit card debt with a fixed rate loan is a quick fix to a bigger issue. You must first develop the habit of not using your card before you ever consolidate.