Making only minimum payments on higher-interest credit card debt can result in a longer time for paying off your debt. A credit card debt consolidation loan from Fair Money could help you consolidate your credit card debt into a new loan with a fixed term and fixed monthly payments.
Let’s find out if consolidating credit card debt with Fair Money is right for you. It’s a story that seemingly never ends. You get out of university, have some car trouble, and find yourself in credit card debt—in many cases—for the first time ever. It can happen very fast. But hopefully, you were able to pay off your credit card debt in just a few months and move on.
In a perfect world, no one would ever have to go into unmanageable credit card debt. But we know this isn’t the reality. There are many reasons people may end up in debt, such as medical bills, unplanned emergencies, or a job layoff. Others may never have learned that it is best to pay a credit card off, in full, each month rather than carry high balances.
If you have high-interest credit card debt and are ready to put together a plan to pay it back, you might consider a popular method known as credit card consolidation. Essentially, both methods involve paying back your debt with another loan or credit card, ideally at a lower interest rate. Still, the two methods are not the same and both options require careful consideration. Below, we’ll answer the question, “What is credit card consolidation?”. Also, we will cover some pros and cons of credit card refinancing so you’ll have more information that could help you make an informed decision.
Credit card consolidation refers to the process of “paying off” credit card(s) with a lower-interest loan—like a personal loan. Sometimes, people use “consolidation” to describe paying off multiple credit card balances with another credit card, but for the purpose of exploring the two different options, we’ll consider it consolidation with a personal loan.
Generally, a personal loan is a loan paid out in a lump sum with a fixed rate and term. For example, you might have a R8,000 loan with a term of 6 months that will not change during the duration of the loan.
With a credit card consolidation loan or personal loan, the borrower typically receives the payment in one lump sum. A personal loan is also known as an “installment loan,” because they are paid back, in equal monthly installments, over a set period of time.
Personal loans are generally unsecured, which means that they are not backed by collateral. Loans that are not backed by collateral tend to have higher interest rates than collateralized loans, but don’t put a borrower’s assets at direct risk of bank seizure like a collateralized loan would.
Still, a personal loan may have a lower interest rate than credit cards—credit cards are notorious for having the highest rates of all .
Using a personal loan involves consolidating your debt and paying off your debt in fixed installments. So, borrowers make equal payments towards the debt at a fixed rate for a fixed time until it is completely eliminated. And borrowers can’t add to their personal loan debt the way they could potentially add to their revolving credit card debt.
Some online lenders and FinTech companies, like Fair Money, are shaking up traditional lending by offering straightforward personal loans that have no hidden fees. A Fair Money personal loan is not only easy and transparent, but has no prepayment penalty or late payment fees. A prepayment penalty could potentially inhibit the borrower from paying their loan down faster, by charging a fee to pay off the loan before the term ends or make extra payments.
With Fair Money, the borrower will receive a fixed interest rate. While a variable rate is usually initially offered at a lower rate of interest, it could go up as market rates rise, whereas a fixed rate ensures payments won’t typically change over time—provided the borrower always pay on time, of course.
The terms of a personal loan will almost always be based on the borrower’s credit history and their holistic financial picture, which means that not every borrower will qualify, or qualify for a rate that’s better than the interest rate they’re currently paying on their credit card(s).
Although borrowers can get a quote to be sure, this option might be best for those that have a solid financial history.
If you’re looking to get a loan online, Fair Money could help. We offer short term loans which can be repaid over a period of 1 to 6 months, meaning you can spread the cost instead of paying back in one lump sum. If approved, you can borrow between R2000 and R8000, subject to affordability through our online process.
We can even give you a decision and you may have the funds in your account on the same day.
We don’t charge any late payment fees or early settlement fees, though we do charge an interest rate on the money you borrow as well as an initiation fee and monthly admin fees. However, we will never place any unexpected extra fees, only what was agreed upfront.
Fill in our free and easy online application form. You will need a ID, bank statement and monthly payslip.
We will automatically assess your eligibility against our credit history and affordability criteria.
Sign and send back your loan agreement which will be sent to you via email subject to approval. Funds deposited into your account within 24 hours.
Feel satisfied with the feeling of paying off your loan and being debt free