How to Tackle Credit Card Debt

The average American household carries over $6,741 in credit card balance from month to month. With high interest rates and penalties, credit card debt can create a heavy burden that might feel inescapable.

If you’re carrying credit card debt, most of your monthly payments are going to paying off interest instead of chipping away at the principal. Refinancing with a personal loan can get you a lower interest rate, so the debt will increase slower, allowing you to pay off more of the principal.

With a credit card debt consolidation loan, you borrow money from a financial institution in order to pay off an existing credit card debt. Instead of attacking the balance on each card individually, you make payments on one loan every month.

Credit card debt consolidation loans can help you stay on top of and manage multiple cards, preventing overdraft or late fees. If you’ve added up some high-interest debt, consolidation can help you get a lower interest rate.

With Fiona, you can quickly view available offers from highly rated financial institutions to see if a personal loan can cut your credit card interest. Fiona lets you search according to a credit score range, purpose and amount, giving you pre-approved offers in real time.

Personal loans can be an effective tool to consolidate your credit card debt, finance home improvement projects or cover a large expense. They have a fixed rate that will stay the same for the duration of the loan. During your loan search, look for options that fit with your financial goals — a manageable monthly payment and a reasonable schedule to pay down your debt. 

Because personal loans are often unsecured, meaning they’re not backed by other collateral like your house or your car, they create risk for banks when consumers default on payments. For that reason, many financial institutions will only approve personal loans for people with good to excellent credit and end up rejecting most of the applications they receive.

There are two kinds of requests for credit information — hard pulls and soft pulls — that affect your credit rating differently. When you fill out an official loan application, usually financial institutions will initiate a hard pull on your credit history, which can temporarily knock down your credit score. Too many hard pulls close together can damage your credit score and make it even more difficult to get approved for a personal loan.

Search platforms like Fiona use your personal information, but only for a soft pull on your credit history. This difference gives you pre-approved offers specifically chosen for you without the hassle and consequences of a full loan application. With Fiona, you can save time by only applying to the loans that best meet your needs.