The Benefit of Paying off Credit Card Debt with an Instalment Loan
Dealing with high-interest credit card debt can feel like a never-ending cycle. One method that may help Canadians take control of this kind of debt is by using an instalment loan. In this blog post, we at Customer First Financing will explore the benefits of paying off credit card debt with an instalment loan.
What is an Instalment Loan?
An instalment loan is a type of loan where you borrow a specific amount of money and pay it back, along with interest, in a series of scheduled payments or instalments. The terms and conditions, including the interest rate and repayment period, are set at the outset.
How can an Instalment Loan Help with Credit Card Debt?
Here’s how using an instalment loan to pay off credit card debt can benefit you:
Fixed Repayment Schedule
Unlike credit card payments, which can fluctuate each month, instalment loans have a fixed repayment schedule. You’ll know exactly how much you need to pay each month and when your debt will be completely paid off.
Improves Credit Score
An instalment loan can also help improve your credit score. By paying off your credit card debt in full, you’re reducing your credit utilization ratio, a factor that can positively affect your credit score. Making regular, on-time payments on your instalment loan can also boost your credit history.
Having a single, consistent loan payment can simplify your budget. You’ll know exactly how much to set aside each month for your debt repayment, which can make managing your finances easier.
Paying off credit card debt with an instalment loan can be an effective strategy for managing high-interest debt. It’s not a solution for everyone, and it’s important to remember that taking out a loan to pay off another debt only works if you’re disciplined about making your regular payments and don’t run up new credit card balances.
As always, Customer First Financing is here to assist you in navigating your financial options. If you’re considering this strategy and have questions, don’t hesitate to reach out to us. We’re committed to helping Canadians make informed financial decisions.