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Should I pay off my credit card debt with a personal loan?

Most people have a love-hate relationship with their credit cards. These cards are useful when funds are tight, but they can also present a heavy debt burden for the average Texas consumer. Although there are a few smart choices for dealing with overwhelming credit card debt -- including bankruptcy -- some consumers are turning to personal loans to solve their problems.

Credit card users typically have more than one line of credit, all of which may have varying interest rates. Repaying each card individually may be difficult in this situation, especially for those who are mostly repaying interest rates. Personal loans might seem like an attractive solution to this problem. These unsecured loans can be for as much as $10,000 or as little as $1,000 and usually have a fixed interest rate, which is typically lower than a standard credit card.

The idea is to pay off all the credit cards with the personal loan, and then repay the loan over time at a lower interest rate. Although this can initially make things easier, it does not address any of the underlying issues consumers might have. For example, why were they struggling with repaying their credit cards? Was there a financial emergency or the slow accumulation of debt that went unnoticed until it was out of control?

Repaying a single personal loan may be easier credit card debt spread across multiple accounts, but it is still debt that must be repaid. For Texas debtors who are already struggling, a personal loan may be little more than a band aid that ultimately prolongs financial suffering. In many cases, bankruptcy is a more effective solution for burdensome debt that has become impossible to repay.

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