How This Grad Used a Personal Loan to Conquer Credit Card Debt

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Personal loans can be used for a wide variety of purposes, including consolidating credit card debt.

Combining multiple debts into one personal loan can make it easier to manage your payments. Plus, it can get you a lower interest rate, thereby saving you money. That’s why Christopher Fourman took out a $13,000 personal loan from SoFi in 2016. This approach helped Fourman lower his interest rate and pay off credit card debt faster.

Here’s how this savvy financial move helped Fourman conquer his debt, and his advice for others looking to do the same.

Graduating with $30,000 in student loans

When Fourman graduated from Wagner College in 2009, he left with a degree in finance. He also left owing $30,000 in student loans.

“I borrowed approximately $30,000 with interest rates varying from 2.6% all the way up to variable rates that were creeping toward 8.0%,” said Fourman.

Once the grace period on his student loans was up, Fourman was facing monthly payments of $650. “[This] was tough when I first started out because I was not making a lot of money,” he said.

It didn’t help that he graduated during a recession when finance jobs were hard to find.

With scarce employment opportunities, Fourman decided to study for his Master of Business Administration degree at Wagner. Today, he remains on campus as a senior college relations officer.

Christopher Fourman

Image credit: Wagner College

Using credit card balance transfers to save on interest

Although Fourman moved from the field of finance to higher education, he was able to put his financial skills to good use.

He built up his credit score so he could increase his borrowing options. Then, he made the most of credit card balance transfers to pay off his student loans ahead of schedule.

“[I] was able to do some crafty balance transfers to some accounts that had 0% promotional APR, which saved me thousands [of dollars],” said Fourman.

In other words, he opened credit cards offering promotional periods of 0% APR. He then transferred his student loans onto those credit cards, effectively reducing his interest rate to zero for a specified period.

This strategy is one way to save money on your student loans. Of course, you must have strong credit to qualify for certain credit cards.

You also must watch out for any balance transfer fees, which often are a percentage of your balance. Finally, you must make sure you can pay off your balance before the promotional period ends.

If not, you could get stuck with high-interest debt with an APR of 16.73% or more. Before using credit card balance transfers to pay off your student loans, make sure it’s not just a short-term solution.

Combating wedding costs and maximizing credit card rewards

Because Fourman used up the 0% APR promotion offers on his credit cards for his student loans, he didn’t have that option when it came to another big expense: planning his wedding.

“I am getting married … and falling in love is expensive!” said Fourman. “Between our wedding plans, honeymoon plans, rings, and also some great travel experiences over the last three years, our cash outflow has been a little more than our cash inflow.”

Rather than drain their savings, Fourman and his fiancee chose to use their existing credit cards and earn rewards points.

“Rather than taking all of these expenses out of savings, we opted to put some of them on credit cards to maximize the rewards and then consolidate onto a low-rate personal loan,” he said.

For Fourman and his fiancee, using credit to pay for purchases was an intentional choice. Some borrowers aren’t so strategic, so it can be easy for them to rack up credit card debt without having a plan for paying it off.

If you’ve got high-interest credit card debt, taking out a personal loan for debt consolidation could be a savvy way to pay it off.

Taking out a personal loan to consolidate debt

When Fourman started looking for a personal loan, he spent weeks in finding the right lender. “I approached my bank where I have been a customer for a long time, and their rates were so high!” he said.

His search for lower interest rates led him to SoFi, the online lender.

“I loved the community support offerings, and their team made me feel at ease,” said Fourman. “Ultimately, the website was so user-friendly and easy to navigate I ended up completing the forms one night while I was waiting for my fiancee to finish a class and then we decided to pull the trigger.”

Fourman took out a $13,000 personal loan at a 5.49% interest rate. As of May 2018, he had paid off $3,000.

“I am scheduled to pay off the personal loan in late 2020, but I pay ahead almost double every month,” said Fourman. “This will also pay off [the loan] in late 2019 at [my] current rate of payment.”

Thanks to his low interest rate and fixed monthly bills, Fourman is confident he can repay this personal loan ahead of schedule.

Consider a low-interest personal loan to pay off debt

Borrowing money can be a double-edged sword. Taking on too much debt can wreck your finances and cause you a ton of stress. But a loan with reasonable terms can be useful for meeting your goals at certain times in life, especially if you have a smart plan for repaying it.

“There are times in life where money flows out more than it flows in,” said Fourman. “A low-rate personal loan provides the peace of mind in that you can do things you need to do for yourself and your family without sacrificing your nest egg or paying thousands of dollars in interest on credit card debt.”

To qualify for low rates, you’ll need a strong credit score or have a qualifying cosigner. You also should read the fine print on any loan agreement before signing it. Watch out for any fees, for instance, and choose a repayment plan that works with your budget.

Finally, crunch the numbers using our personal loan calculator to understand how much interest you’ll be paying over the long run. By doing your due diligence, you can make the best borrowing decisions for your finances.

Interested in a personal loan?

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

RATES (APR)loan amount
5.99% – 17.88%1 $5,000 to $100,000
5.69% – 35.99% $1,000 to $50,000
6.98% – 35.89%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
5.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 17.88% APR (with AutoPay). Variable rates from 6.49% APR to 14.70% APR (with AutoPay). SoFi rate ranges are current as of November 4, 2019 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.49% APR assumes current 1-month LIBOR rate of 1.81% plus 3.08% margin minus 0.25% AutoPay discount. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. All loans available through FreedomPlus.com are made by Cross River Bank, a New Jersey State Chartered Commercial Bank, Member FDIC, Equal Housing Lender. All loan and rate terms are subject to eligibility restrictions, application review, credit score, loan amount, loan term, lender approval, and credit usage and history. Eligibility for a loan is not guaranteed. Loans are not available to residents of all states – please call a FreedomPlus representative for further details. The following limitations, in addition to others, shall apply: FreedomPlus does not arrange loans in: (i) Arizona under $10,500; (ii) Massachusetts under $6,500, (iii) Ohio under $5,500, and (iv) Georgia under $3,500. Repayment periods range from 24 to 60 months. The range of APRs on loans made available through FreedomPlus is 5.99% to a maximum of 29.99%. APR. The APR calculation includes all applicable fees, including the loan origination fee. For Example, a four year $20,000 loan with an interest rate of 15.49% and corresponding APR of 18.34% would have an estimated monthly payment of $561.60 and a total cost payable of $7,948.13. To qualify for a 5.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

* Personal loans made through Upgrade feature APRs of 6.98%-35.89%. All personal loans have a 1.5% to 6% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by WebBank, Member FDIC.

** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.

Published in Loans, Personal Finance

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