Should I consolidate my credit card debt?
With the national average credit card interest rate now over 20%, the highest in almost four decades, you may be asking yourself should I consolidate my credit card debt? Not only are credit card rates high, but credit card debt is also at a record high. As reported on Good Morning America just last week, the average household is now carrying nearly $6,500 in credit card debt. Credit card delinquencies have also been going up, especially among younger borrowers.
Lock in a fixed rate with a debt consolidation loan
With the Federal Reserve raising its benchmark interest rate by a quarter percentage point earlier this month, adjustable credit card and loan rates also went up. This means more expensive debt for borrowers and possibly an increase in minimum payments. Reducing debt, especially when paying a variable interest rate, will help you survive in a rising rate environment.
A debt consolidation loan is a personal loan with a fixed rate that can be used to pay off credit cards or other high-interest debt. Paying off credit card debt with a fixed-rate personal loan will leave you with one monthly payment that’s fixed over the life of the loan. Spirit Financial is currently offering a special personal loan rate for qualified borrowers that’s less than half the interest rate of the average credit card rate.
An example of the savings when consolidating with a Spirit Financial Personal Loan
| Credit Card² | Personal Loan* | |
|---|---|---|
| Current Balance | $10,000 | $10,000 |
| Monthly Payment | $300 | $300 |
| Interest Rate | 23.55% APR² | 9.24% APR* |
| Months to Pay Off | 55¹ | 39 | Total Interest Paid | $6,387¹ | $1,599 | Total Amount Paid | $16,387¹ | $11,599 |
You will notice from the illustration above that consolidating high-rate credit card debt using a fixed-rate Spirit Financial personal loan, not only enables the user to pay off debt faster, but also save $4,788 in interest.
We hope we’ve helped you answer the important question of “should I consolidate my credit card debt?” For many struggling with credit card debt, debt consolidation can provide some light at the end of the tunnel.
Learn more about tackling credit card debt with our blog “5 Ways to Avoid High-Interest Credit Card Debt.”
* APR = Annual Percentage Rate. Rates are for qualified borrowers and are based on the creditworthiness of the individual. Total loan amount and loan term will vary based on the creditworthiness. Loan terms available from 12 to 60 months.
¹ Calculated using 23.55% APR and could be higher if you qualify for a higher rate.
² High-interest credit card information gathered from lendingtree.com as of February 14, 2023, and subject to change. Credit cards offered by other institutions may have different rates and terms.