Monthly bills can often feel like an endless cycle between housing, utilities, car payments, credit cards, and more. At times, it can seem like no matter how much you plan and budget for your recurring expenses, you still end up falling behind.
But here’s the thing—you’re not alone. In fact, according to CareerBuilder, 78% of U.S. workers find themselves living paycheck to paycheck. While that number can be startling to hear, it serves as a good reminder that you truly aren’t alone in your financial struggles.
If you’ve recently fallen behind on your bills, you may be wondering how you’re going to catch back up. One viable option to explore is the use of a personal loan. Curious about how that works and why it may be the right solution for your financial situation? Keep reading to learn more about the best ways to use a personal loan to catch up on bills.
To Save on Interest
Here’s something to consider: the average credit card has an interest rate of 19.02%. If you’re only able to make minimum payments, you’re not likely to see a big dent in your overall balance with an interest rate that high.
If you are stuck in a never-ending minimum payment cycle on your credit cards, this is where the best use of a personal loan comes in. The average personal loan has an interest rate of 9.41%—less than half of the typical credit card rate. For instance, if you have a credit card with a current balance of $5,000, you can use the funds from your lower-rate personal loan to pay off your balance in full. While you’ll still have the personal loan to repay, that substantially lower interest rate means a much more manageable monthly payment. Plus, you can confidently move forward with a clear timeline for paying off your personal loan.
To Give Yourself Some Breathing Room
When you list out all of your regular expenses, it’s probably no surprise that the majority of your monthly funds go towards your housing costs. According to the Bureau of Labor Statistics, housing is the largest single expense category, accounting for 33% of all monthly expenses.
If you are already behind on your bills, with so much of your monthly budget going towards housing costs, a personal loan could help give you some financial breathing room to catch up. By using a personal loan to cover your rent or mortgage for a few months, you can free up a large portion of your monthly budget to pay down other expenses.
To Take Care of Unexpected Bills
When you receive notice of a bill that falls outside of your typical monthly expenses (medical bills are a common one), it can be easy to push it aside and unintentionally forget about it. You know these bills need to be taken care of, but for one reason or another—maybe you’re lacking sufficient emergency funds—you just haven’t had the opportunity to pay them off in full.
In cases where these unexpected bills add up to large amounts of money, a personal loan can help you take care of them all at once and spread the costs over months. Having the opportunity to pay your debts in full will not only give you peace of mind but give you the ability to focus on other financial goals.
Keep in mind that using a personal loan to catch up on bills must be done responsibly. It’s crucial to have a realistic budget plan in place, so you don’t end up in the same situation with an additional personal loan payment each month on top of everything else.
If you’re considering a personal loan to help you catch up on monthly bills, we can help you get the funds you need fast. At Credit Direct, our online application takes just minutes to complete and won’t affect your credit score. Borrow up to $40,000 with funding as soon as 24 hours. Apply online to check offers now!