Debt Consolidation Loans or Balance Transfer Cards: Which Is Right for You?
Debt consolidation loans and balance transfer credit cards are two common debt consolidation strategies that can lower the amount of interest you owe and help you pay off debt faster and more simply.
A key difference involves how many debts you want to turn into one. Debt consolidation loans are typically larger sums used to combine several debts, while balance transfers usually pay off smaller balances on one or two high-interest credit cards.
A debt consolidation loan rolls multiple debts into a single monthly payment that you pay over a fixed period, typically two to five years. These loans can have lower interest rates than most credit cards, which allows you to save money on interest over the life of the loan.
A balance transfer involves moving high-interest credit card debt to a new credit card that charges 0% interest for a period of time, usually 12 to 18 months.
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