Using a personal loan for credit card payment is a possibility for anyone who finds themselves stuck and needing some help. A lot of people have trouble paying off their credit card debt these days, often because it’s so easy to hand over the little piece of plastic without thinking about the potential cost behind it.
Credit card debt is a prevalent problem in New Zealand. In fact, a recent statistic showed that our country has 7.4 million dollars of accumulated debt. That’s a lot of Kiwis in credit card debt!
At Nectar we’re invested in making your life simpler, so in this article, we’re going to go over how credit card debt works, and how you can beat it using a personal or debt consolidation loan.
Don’t become a statistic, become an expert.
Rather than a debit card, which uses the money that you already have, a credit card borrows money from the bank to make any payments you use it for. Based on a few factors like your credit history and financial situation, your bank will assign you a limit on how much money you can borrow, called a “credit limit”.
In your agreement with your bank there may also be a mention of a statement or interest-free period. Many banks use a monthly interest-free period, so you have until the end of the month to pay off the money you spent. Pay all of it off by that time and you will have no interest going forward, but a lot of people do not or cannot pay off the whole amount come billing time.
It’s a noticeable phenomenon in New Zealand, with 35 percent of Kiwis leaving their credit card statements either partially or fully unpaid at the end of each month. That’s one in three!
The problem with leaving your statement unpaid at the end of the billing period is that the unpaid amounts start to accumulate interest at a very rapid rate. Most credit card companies charge interest of around 19 percent, and that builds on itself for every month you leave it unpaid. So, then you get stuck with the problem of paying off the interest you’re accumulating rather than the actual credit card debt itself.
Two steps forward, one step back.
You might wonder how a loan can solve the problem of outstanding credit card debt, and we have a very simple answer. Choosing to consolidate your debt into one loan means that you are able to set up a predictable payment schedule that last for whatever period you choose. At the end of your loan term, the credit card debt is gone, and your problem is solved.
You can choose your loan term to create a repayment schedule that would suit you. If you choose a two-year loan term you may pay a bit more in interest, but your weekly repayments will reduce to a more manageable amount than a six-month term.
Either way, a personal loan means that you create a clear payment schedule, which makes budgeting a lot easier and less stressful for you.
We’re New Zealand’s renowned provider of fast personal loans, and we’re standing by to help you manage your debt. If you have any questions feel free to contact our friendly customer care team. Make your life simpler with Nectar!
*Nectar’s lending criteria and responsible lending checks apply.
