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

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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 and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.

a person using a computer to pay credit card

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?

Here are the top personal loan lenders of 2018!
LenderRates (APR)Loan Amount 
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.199% APR to 15.365% APR (with AutoPay). Variable rates from 6.145% APR to 14.685% APR (with AutoPay). SoFi rate ranges are current as of June 15, 2018 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 6.145% APR assumes current 1-month LIBOR rate of 1.97% plus 4.175% 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. 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 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, student loans or other personal loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI and VT. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan, and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
7.73% – 29.99%$1,000 - $50,000
Check rate nowon SLH's secure site
6.15% – 15.37%1$5,000 - $100,000
Check rate nowon SLH's secure site
6.87% – 35.97%*$1,000 - $50,000Visit Upgrade
8.00% – 25.00%$5,000 - $35,000
Check rate nowon SLH's secure site
4.99% – 29.99%$10,000 - $35,000Visit FreedomPlus
5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
5.99% – 35.89%$1,000 - $40,000Visit LendingClub
5.49% – 18.24%$5,000 - $75,000Visit Earnest
9.95% – 35.99%$2,000 - $35,000Visit Avant
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. 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 understand what you are buying, and consult 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. Please do your homework and let us know if you have any questions or concerns.