How personal loans and 0% APR credit cards can get you out of high interest credit card debt and get you back in good financial health. (iStock)

Massive amounts of credit card debt can be nerve-racking. You may have enough income each month to pay off your mortgage, utilities, and other necessities, but you don’t have much left to pay credit cards.

You’re not alone. Credit card debt in the United States was around $ 890 billion in the first quarter of 2020, according to Statistical.

Two of the most common methods to clear credit card debt are a personal loan or the opening of a 0% APR credit card – but what is really better for debt consolidation?

A 0% APR credit card allows you to consolidate debt or transfer an existing balance and pay zero interest during the introductory period. Most personal loans are unsecured, which means you won’t need any collateral to get a loan from a bank, credit union, or online lender. But you may need good credit to qualify. Personal loans are repaid in fixed monthly payments for a predetermined period, usually 12 to 60 months.

So which is best depends on your personal needs.

Personal loans for debt consolidation

Paying off your debts with a personal loan has advantages and disadvantages. Some lenders have imposed more stringent requirements on who will and who will not be qualified for a personal loan due to the coronavirus pandemic. Others have introduced low rate low rate loans if you have been hit and have gone through tough times financially. Even so, if your credit is not good to excellent and your financial history is strong, it can be much more difficult to qualify.

Remember: you can explore all your personal loan options by visiting Credible.


You will have a fixed repayment term. Personal loans have fixed repayment terms that can range from around one to five years. This makes it easier to budget and plan for your repayment date well in advance.

You can lock in a low interest rate. Annual Percentage Rates (APRs) for personal loans vary from approximately 6% to 36%. Keep in mind that rates may go up even though you received an initial “preferred rate” when you got the loan, depending on the Consumer Financial Protection Bureau. Can believable show you the rates you are currently eligible for – just plug in your information.


You can rest easy with an unsecured loan. Most personal loans are unsecured, which means that no collateral is needed to secure the loan. Some personal loans, however, are unsecured, so if you miss payments, you could lose your collateral.

It is possible to improve your credit score. Using a personal loan to consolidate your debts can help lower your utilization rate – how much of your available credit you are using at any given time – and increase your credit score if you make your payments on time. You can make the process a lot easier by visiting Credible, which lets you compare personal loan quotes from multiple lenders in as little as two minutes. Plus, it doesn’t affect your credit score.


The inconvenients

You can pay a higher interest rate. Average APRs on personal loans are around 6-36%. If you have good credit, your APR will likely be lower. But if you’ve missed payments in the past, you could end up paying a higher interest rate, in the range of 29% to 35%.

Visit Credible to use their personal loan calculator and find the best personal loan rates.

You could end up paying a fee. Some lenders charge a processing or origination fee to take out a personal loan. These fees can add up, increasing the amount you owe on the loan. Some lenders also charge prepayment penalties for prepaying your loan.

You may need to post a guarantee. Most personal loans are unsecured, which means that no collateral is required to qualify. However, some lenders require collateral for the loan. If you miss a payment, you risk losing your warranty.

0% APR cards for debt consolidation

Using a 0% APR card for debt consolidation or balance transfer may be a better option than a personal loan. But not always. If you have debt on multiple cards and need time to pay off your balances, a credit card with a temporary 0% APR may not be the best option. But if you plan to pay off the balance quickly or want to access funds through a revolving line of credit, a low or 0% credit card may be suitable.

Before the pandemic, banks approved about 200 million 0% APR balance transfer cards each month. Since then, that number has declined dramatically, according to a Federal Reserve Bank of Philadelphia report.

Credible can help you find the right credit card for you. Choose zero percent credit cards and get a breakdown of annual fees, welcome offers, credit needed, and more.



You will get low interest or 0% for a promotional period. During the promotional period, you will pay low interest or 0% interest on all transferred balances and new purchases. You can visit Credible for compare different credit cards at zero percent and find your perfect match.

You can consolidate your debt: A low interest or 0% card allows you to transfer balances from high interest cards so you can consolidate your debt into one low monthly payment.

You could earn rewards. With some 0% credit cards, you also earn rewards and other benefits.

May be ideal for a large purchase. If you are planning to make a large purchase, a 0% interest card may be an option to consider if you plan to pay off the balance before the temporary promotional period ends.


The inconvenients

Your low or 0% APR is temporary. If you pay off the balance before the promotional period ends, this is a good option. Otherwise, you will be charged interest.

You might pay a fee. You could pay a balance transfer fee it can go up to 3% -5%. There may also be other charges which may add up.

You may not be eligible. If your credit is good to excellent, your chances are good. However, if your credit is less than stellar, you might not qualify, especially during the pandemic.

You could lose your 0% APR. If you make late payments or missed payments, you could lose your 0% APR and pay high interest.

Visit a online market like Credible to view multiple 0% APR credit card options in one place.


Should you use a personal loan or 0% APR credit card to consolidate your debt?

Using a personal loan to consolidate debt can be a good option if it comes with a low APR and favorable terms. Most personal loans are unsecured and you can usually lock in your rate.

On the other hand, a low interest or 0% loan may be better if you plan to pay off your debt quickly. You won’t pay any interest during the promotional period, but you may end up paying high fees.


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