News

3 Reasons to Get a Personal Loan with Arkansas Federal

If you’re like most Americans, you have some combination of debt, such as car loans, credit cards, medical debt, student loans, and others—each with different interest rates, due dates, and finance charges. Our lives are hectic enough, so why not make paying your bills easier and save money along the way?  

  

That’s where a personal loan comes in. You can use it to pay off all debts, leaving you with one payment instead. Plus, you can eliminate those higher rates, such as on credit cards, and potentially save hundreds—even thousands on interest. 

  

What’s a Personal Loan?  

When you get a personal loan, you’ll get one upfront lump sum that you can use to pay off everything else. Then, you’ll repay the personal loan with a fixed, affordable monthly payment with a set payoff date.   

  

You might ask yourself, “Why would I want to exchange already established debt for another loan debt? Isn’t that just trading one payment for another payment? It’s still money going out each month, so why does it matter?” 

  

All great questions. So, let’s look at the top three reasons why a personal loan makes sense.  

  

  1. Simplify Payments. By paying off multiple debt accounts with a personal loan, you can enjoy one single monthly payment. Unlike credit cards, the interest rate for a personal loan never changes, meaning your payment will always be the same. You’ll also know exactly when you’ll pay it off. Hello, light at the end of the tunnel!  

  1. Save Money. A personal loan could have a lower interest rate than your credit cards or other debts, which means you’ll save money in interest overall. Plus, the monthly payments for a personal loan could even be lower, depending on the rate and term (time you’ve agreed to pay the loan back). 

  1. Improve Credit Score. Another advantage to using a personal loan to pay off debt is that it can help increase your credit score. With on-time payments made consistently, your credit score can improve.  

  

For the savings alone, a personal loan can really make cents (see what we did there?). Here’s an apples-to-apples example of how much you could save each month.  

  

  

Balance 

Interest Rate 

Monthly Payment 

5-year  
interest paid 

High-Interest Credit Card 

$15,000 

21% 

$406  

(min. payment) 

$9,338 

Personal Loan 

$15,000 

10% 

$320 
(fixed payment) 

$4,099 

Estimated Personal Loan Savings 

  

$5,239 

  

Using the example above, you could save $5,239 by taking out a personal loan to pay off just one high-interest card. That’s $86 more dollars in your pocket a month ($406 - $320) or $1,032 a year! 

  

Sum It Up 

Consolidating your debts by paying them off with a fixed-rate personal loan could be a great option. Not only will you simplify your payments, but you could save a lot of money.  

  

Ready to get started? Reach out to Arkansas Federal Credit Union and enjoy affordable fixed rates, comfortable payments, and one easy monthly bill. There’s no cost to apply for a personal loan with them, and the application is easy. Apply online in minutes.  

  

Have questions? Call Arkansas Federal at 800.456.3000 or visit a local branch.