The scary statistics show that more than forty-one percent of households have some sort of credit card debt. While many people have around two thousand dollars, the truth is that the average amount of credit card debt is close to six thousand dollars.
When you are in credit card debt, it can often feel overwhelming. You are probably looking for any way to pay it off. Many people recommend taking out a loan. However, it isn't always a good idea.
Here are some reasons why you shouldn't get a loan to pay off your credit card debt.
Because of your debt, you may not be eligible for a loan. Lenders are very careful about who they lend money to so if you owe a large amount of money, you may not be able to get a loan at all.
Though a loan might look good on paper, there may be some fees that you don't know about. It is important to read the fine print. You may find yourself paying off your loan quickly, only to be told that there is a penalty if you pay the loan off early.
There could be some other hidden fees that may cost you more in the long run. Some loans come with a loan-origination fee, which can be up to six percent of your total loan. If you find yourself in a loan with an origination fee, you could find yourself paying several hundred or thousand dollars more, just to get away from your credit card debt.
It isn't going to take care of the problem. If you are in debt because you overspend or you are out of work, a loan isn't going to fix that. Instead, you may have a loan and continue to use your credit card and find yourself in an even deeper hole.
Though you may think that it is a good idea to get a loan, it isn't going to take care of the problem. In fact, you may end up with a loan and more debt!
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Attorney James C. Shields received his J.D. from Loyola Law School in 1985 and an M.B.A. in Finance from the University of California, Los Angeles in 1975. Attorney Shields also earned a B.A in Economics from California State University Dominguez Hills in 1973. He previously worked as an attorney at the Law Offices of Robert G. Winterbotham, and in 1998, he started his own law firm to emphasize on the practice areas of bankruptcy, wills and probate, estate planning and conservatorship, and traffic cases.
James C. Shields is a member of the State Bar of California, the State Bar of Arizona, and the State Bar of Oregon. He is also a longtime member of the American Bar Association, the National Association of Consumer Bankruptcy Attorneys, and the Los Angeles County Bar Association.