How is a Debt Consolidation Loan Different Than A Credit Card

 What is a Debt Consolidation Loan?

A debt consolidation loan is a form of debt refinancing that combines multiple balances from credit cards and other high-interest loans into a single loan with a fixed rate and term. It can help you save money by reducing your interest rate, or make it easier to pay off debt faster. A debt consolidation loan may also lower your monthly payment. And depending on your credit profile, a debt consolidation loan could help improve your credit by diversifying your credit mix, showing that you can make on-time monthly payments, and reducing your total debt (as long as you’re not adding any new debt).

How is a Debt Consolidation Loan Different Than A Credit Card?

Instead of credit limits, introductory rates, or revolving balances, debt consolidation loans come with a fixed rate and an affordable monthly payment that you choose up front. This means you get to start putting a dent into your debt right away. No additional interest will be added to your loan once you lock in your rate, so nearly all of your monthly payment goes to quickly reducing your balance and paying down what you owe.

How Much Can I Save ?

Members report saving money over the course of their loan with LendingClub when they use it to consolidate debt or pay down credit cards. Debt consolidation loans from LendingClub Bank have fixed rates and terms, so your monthly payment amount never changes, plus you'll know the exact date your loan will be paid in full.

When comparing your options, remember to factor in all costs such as balance transfer fees, annual fees, and early payoff penalties you may incur with credit cards or when borrowing from other sources.

Will Consolidating My Debt Hurt My Credit?

Combining multiple debt balances into one new loan is likely to raise your credit scores over the long term as long as you use the money to pay off your debt. It is possible you could see a temporary decline in your credit scores at first, but your scores can quickly recover (and improve) if you continue to make payments on time and don't accumulate any more debt.

Should I Get A Consolidation Debt Loan?

By rolling multiple debts such as medical, credit card, or other debt balances into one loan with one monthly payment—debt consolidation can be a good idea, especially if you qualify for a lower rate. A lower interest rate will help you reduce your total debt expense and pay the debt off faster. A debt consolidation loan may also lower your monthly payment.

How Quickly Can I Get A Debt Consolidation Loan ?

Over one-third of our customers get funded within 24 hours after approval. You can help keep things moving along by checking your To-Do List and making sure you have submitted all the documents and information requested.

Once your personal financial information is verified and your loan funded, you can choose to have the money sent straight to your bank account and/or have us pay your creditors directly. The best part is you can apply and complete the entire process online from the comfort of your home using your phone, laptop, or tablet.