Personal Loan Or Balance Transfer: What’s The Best Way To Consolidate Debt?

At times, when you take an amount from a friend/relative and owe him/her the specified amount, that ultimately equates to a debt. With time, those debts pile up, and you need time to repay them because you don’t have the required amount available with you. For these unfortunate times, you have ‘Personal Loans.’ 

Balance Transfers is when you repay the existing debt with a Credit Card. It can be another great alternative if you want to keep your costs low. An added benefit that comes along with Balance Transfers is that you can avail for a Balance Transfer Card and receive it easily on a shorter time period.

Suppose you have different kinds of debts (Bank Loans, Bank Overdrafts, Benefit Overpayments, Catalogue Debts, Council Tax Arrears, Credit and Store Cards) to combine them into a loan. In that case, Personal Loans are a better choice to make.

Comparison between personal Loans and Balance transfer 

Talking about the benefits of the two, you will be able to make a clearer choice.

Through Personal Loans, you are allowed to consolidate debt which is not through a Credit card. With something called – ‘Credit Card Balance Transfer,’ you can consolidate the debt on the Credit Card because you can easily repay the money from one Credit Card to another. 

But, if you have medical debts, then it becomes impossible to compensate for the same, through Credit Cards. In this case, if you have a Personal Loan, the lender gives you a cheque / a deposit, of the amount borrowed into your account. 

Personal Loans give you additional time and space to become debt-free. When you have a debt, your ultimate wish is to repay them at the earliest. Helping with the same, Credit Card Balance Transfers can lower the Rates of Interest for the debts, but only for a temporary period. 

if you have a good Balance Transfer Card, the bank will grant you a 0% promotional rate. However, the top-up period that the bank provides is only for 15 months. This means, if you plan on repaying your debt through a card transfer, you will have only that limited time period to repay the debt. On the contrary, Personal Loans are designed for a longer period of time. Their tenure is set for 3-6 years, giving you an ample amount of time to repay the loan.

Personal Loans provide reliability with regards to payoff time and costs. Opting for Balance Transfers can be less beneficial since it is only for a limited period, but Personal Loans give you the guarantee and a specific time period within which you will know the payoff date and costs. This consolidation period given in a personal loan can be paid off in a better way than going in for Balance Transfers.

The mirror opposite of Personal Loans is Balance Transfers. These transfers cost you less, in comparison to Personal Loans. Balance Transfers may cost less, but if you have a good Balance Transfer Card, it will not charge interest for the upcoming months. On the other hand, you will have to pay a significant interest rate for Personal Loans, which will add on to the cost.

Balance Transfer Cards can be easier to apply. Those who go in for Credit Cards, they make the application process easier, based on the customer’s preference. Personal Loans, on the contrary, have a tedious and prolonged application process, for which you need to provide for financial information, which can be a hassle.

Now that we have drawn a clear picture on how to consolidate and repay your debts, you can make your choices as per your preferences. All that is required to know is the amount of the debt that you owe to an institution/individual; you need to know the repayment method and the type of debt it is. If you have a good credit rate, you can qualify for a Personal Loan at a lower rate, without worrying about your 0% Balance Transfer. It is a likeable option for you to choose a Personal Loan over anything else.

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