Is Paying Off Credit Card Debt with Unsecured Loan a Solution?
As you know credit card debt is consumer debt. Unfortunately, many people are not disciplined in using credit cards, so they get into an acute debt credit card. If you assume Collateral Credit (Unsecured Loan) is the solution to paying credit card debt, then you have made a fatal mistake. In the end, you still have to pay, because the debt does not make any money.
Unlike the productive debt that is used for business capital. There is a possibility that loan money will generate profits so that it can be used to pay off debts. Indeed there are some benefits that can be obtained by taking unsecured credit to cover credit card debt, but there are also risks that must be borne.
Therefore, before deciding to use Unsecured Loan to pay off other debts, you must understand what are the risks and considerations. Here are the risks and considerations of taking unsecured credit and using it to cover credit card debt:
Some Unsecured Loan, the interest is high (can be more than 20% a year)
The interest requested for unsecured credit is usually quite high. This is because the bank does not hold any collateral. So the guarantee that the bank has is your reputation. The risk of money does not return very high, therefore the requested interest is also high. Basically using Unsecured Loan to pay credit card debt is transferring debt from one place to another. If the interest offered by the bank is the same as the interest on your credit card, unsecured credit is not a solution. Using Unsecured Loan will only be a place to dig a hole in the hole to delay your credit payment. It would be even worse if the unsecured credit interest taken was apparently higher than the credit card interest. Instead of helping pay off debts, it will even make your debt pile up.
If you want to make unsecured credit a solution to paying credit card debt, make sure the Unsecured Loan interest is smaller than the credit card interest. The difference between unsecured credit interest and credit card interest can be beneficial for you. That way your burden will be reduced by a few percent than you should pay. It’s just that the lower the Unsecured Loan principal interest is offered, usually the submission process will be more difficult than unsecured credit with high interest. Make sure you meet the requirements requested so that your loan can be approved.
Short Installment Period
The period of time to repay Unsecured Loan is relatively not long. Generally unsecured credit payments are 12 – 36 months. This period of time can give you additional time to pay off debt. But do not fall asleep with the ‘extra time’ because the time period is not long. You must settle Unsecured Loan debt in the period of time so that the debt does not accumulate and be prolonged.
Many Pieces and Administration Fees
When you take unsecured credit there are a lot of costs to pay such as administration fees, provision fees, accelerated repayment fees, etc. Coupled with several requirements that must be met and the length of time for disbursement of funds that will be troublesome. You must take into account all the costs and the level of difficulty to consider taking unsecured credit. The principal interest is not the only cost that must be considered. If the Unsecured Loan principal interest is a little cheaper than your credit card interest, it is better to first calculate all other costs. Add up the principal Unsecured Loan interest plus all the costs you have to pay. Compare these total costs with the total cost of your credit card. If the cost is more expensive, you should not use unsecured credit to pay credit card debt. Look for other solutions to pay the debt so that the costs to be paid do not accumulate more.
Black List of Bank Lenders and Bank Indonesia
Someone serious consequences that can not resolve the debt Unsecured Loan is his name will be blacklisted (black list) bank. If someone’s name has entered the BI black list , then that person will find it difficult to apply for the next loan and loan. The person can take steps to improve so that his name is returned from the list. But once someone’s name is listed in the blacklist, the data history will not be erased.
Unsecured Loan As A Credit Card Debt Solution
Unsecured Loan can be used as a solution to pay credit card debt if the costs to be paid are not higher. Even if the total unsecured credit costs are lower, unsecured credit can help reduce the burden of credit card debt. If the costs are higher then the profit you get is just buying time to pay off the debt, but accumulating more debt. Besides costs, there are a number of things that you must consider if you want to take Unsecured Loan to pay credit card debt. Make sure you know all the risks that must be borne if you take Unsecured Loan.