Who should — and should not — consider using a personal loan to pay off holiday debt
Plus, how best to get a personal loan if it makes sense for you.
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If you found yourself in holiday debt this year, you’re not alone: More than 1 in 3 (36%) of Americans took on holiday debt this year, averaging $1,249, according to LendingTree. What’s more, it’s often hard to pay that debt off: A recent NerdWallet survey found that 29% of shoppers who put gifts on a credit card in 2020 carried that debt all through this year.
One option for paying off that holiday debt that could save you money? Getting a personal loan, though doing so can be risky. If you have good credit, a personal loan can be a much more affordable way to finance holiday purchases instead of a credit card. “If you can qualify for a personal loan around 5% or 6%, that’s a lot better than the average credit card, which charges over 16%,” says Ted Rossman, senior industry analyst at . And a personal loan can make even more sense if you’re consolidating other high-interest debt, like consolidating loans and credit card debt. That said, it’s not the right option for everyone, and there are risks. Here’s what you need to know.
See what rate you might qualify for
Because personal loans can help borrowers get access to a significant amount of cash, sometimes at a relatively low interest rate, Jacob Channel, senior economic analyst at LendingTree, says they can be a good way to deal with high-interest holiday debt. Read more
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