Managing and paying down credit card debt can be a serious challenge. Here at Borrowell, we believe that a personal loan is a great solution for paying off credit cards. The benefits are clear: a Borrowell personal loan can be used to consolidate multiple credit card debts into a single, lower-interest loan with one manageable monthly payment. Moving your credit card debt to a personal loan can have huge benefits for your credit score.
Credit-card debt tends to be more damaging to credit scores than a personal loan, which is considered instalment debt. The credit-utilization ratio does not take instalment debt into account. This strategy would result in zero dollars of credit-card debt on the borrower’s credit report, which could boost their score by 100 points or more, says [Credit Sesame’s John Ulzheimer]. They’ll also pay lower rates to boot –
We weigh the pros and cons of a Borrowell personal loan vs credit card debt below.
Don’t get us wrong – credit cards are a very useful tool when used responsibly. We are also not advocating taking on more debt for debt’s sake. After all, when life’s expenses crop up it is best to pay cash if you can. However, credit cards are convenient, offer great rewards, and are great for use cases such as booking travel or shopping online. The danger with credit cards exists when you fall into the trap of carrying a balance month over month. Credit card interest rates are sky high. If you hold a large balance it can take you decades to pay off. That’s where Borrowell can help.
The Borrowell personal loan features no prepayment penalties, so you have the flexibility to make extra payments whenever you choose to lower your total interest due. The road to being debt-free couldn’t be easier. There is something nice about knowing that you can be debt free in 3 or 5 years or less – it adds a sense of control and responsibility. All it takes is one minute to apply online.
No matter if you choose to select a Borrowell personal loan or not, just know that we would love to help you along on your journey towards financial freedom. Follow our blog for more tips on how to manage your finances, improve your credit score, and move towards a credit card debt-free life.
You may have heard that making on-time payments is the key to having a good credit score. But just how important is it to make your payments on time? If you’ve made the mistake of missing payments in the past, what can you do to help improve your credit score now?
The Borrowell Team
Jun 12, 2020
It's always good to know what you can do to improve your credit score, no matter where you are on your financial journey. Whether you’re looking to rebuild your profile or planning a big purchase in the future, increasing your score can mean more attractive interest rates and offers on things like credit cards, loans, mortgages and lines of credit.
The Borrowell Team
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With all the different credit options available in Canada, it’s important to understand the differences between each one so that you can find the right product for your needs. Credit can be useful to help you establish a history and finance purchases, but should be used mindfully. In this Borrowing 101 article, we’ll give you an overview of personal loans and lines of credit to help you understand how they work, when to use them, and what to be careful of in order to protect your credit score.
The Borrowell Team
Apr 27, 2020
Borrowell® is a registered trademark of Borrowell Inc. All Rights Reserved. The Equifax credit score is based on Equifax’s proprietary model and may not be the same score used by third parties to determine your credit profile. The score provided to you for educational use is the Equifax Risk Score.
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