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Unsecured personal loans are loans provided by banks, credit unions, and online lenders that do not require any type of collateral. They provide an opportunity to borrow funds without putting any of your assets (like your home or car) at risk. The funds can be used for virtually any purpose, including debt consolidation, home improvements, and large purchases.

How do you know if an unsecured personal loan is the right choice for you? We’ll dive into exactly what an unsecured personal loan is, the benefits of an unsecured personal loan, and how to choose the best loan for your situation.

What Is an Unsecured Loan?

An unsecured loan is a loan that is not backed by collateral, such as your home, bank account balances, or vehicle. To have a loan “backed” by an asset means that a bank or lender has the right to take that asset in the event of default on the loan.

Loans backed by collateral (such as mortgages, home equity loans, and auto loans) generally pose less risk to lenders — if the borrower defaults, they can recoup the balance due by seizing the collateralized property. Because unsecured loans pose a higher risk, they tend to have higher interest rates and come in lower loan amounts compared to secured loans.

Some borrowers, however, prefer unsecured loans, since they don’t require you to put your home, car, or other personal assets at risk. You qualify for an unsecured personal loan strictly on your ability to repay the borrowed amount. Lenders assess this by looking at your income, credit scores, and borrowing history.


💡 Quick Tip: Some personal loan lenders can release your funds as quickly as the same day your loan is approved.

What Are Common Uses for Unsecured Personal Loans?

Unsecured personal loans can be used for a wide array of purposes. Here are some of the most common reasons why people take out unsecured personal loans.

Credit Card Payoff

Credit cards tend to have high annual percentage rates (APRs). Currently, the average credit card interest rate is 28.02%. Personal loans, on the other hand, charge an average interest rate of 11.31 (if you have a high credit score, you may be able to get a lower APR).

Using a personal loan to pay off credit card debt can potentially help you save money on interest. You can get an estimate of the potential savings of using an unsecured personal loan to pay off a credit card balance by using a personal loan calculator.

Debt Consolidation

If you make many different credit card (or other debt) payments every month, it can be difficult to keep track of all the due dates and minimum amounts owed. If you miss a payment or don’t pay at least the amount due, you can get hit with late fees and your credit could be negatively affected.

Debt consolidation is the process of taking out an unsecured personal loan and using it to pay off multiple debts, leaving you with just one monthly payment. This simplifies repayment and, if you get a loan with a lower interest rate, could also help you save money.

Medical Expenses

Unsecured personal loans can be used to pay for a range of medical treatments, including elective procedures, fertility treatments, prescriptions, surgeries, dental procedures, and more.

A number of lenders, including certain banks, credit unions and online lenders, offer personal loans that can be used for medical expenses. Though interest expenses will add to the total cost of treatment, this can be a less expensive option than putting the medical expense on your credit card.

Home Projects

Whether you’re thinking about updating your kitchen or renovating a bathroom, you may be able to use an unsecured personal loan, also called a home improvement loan, to obtain funding for the project.

An unsecured personal loan can be especially useful if you need cash quickly for critical repairs or emergencies. It also provides an alternative to taking out a home equity loan or line of credit for remodeling or repairs, both of which are secured loans and require equity in your home.

What Are Some Different Types of Unsecured Loans?

The most common types of unsecured loans include:

•   Personal loans Personal loans are typically unsecured, though some lenders offer secured options. Loan amounts range from $1,000 to $50,000, with repayment terms of two to seven years. Interest rates are typically fixed.

•   Personal lines of credit A personal line of credit is a revolving loan, which means the loan can be spent, repaid, and spent again, similar to a credit card. While some credit lines are secured, many lenders offer unsecured options. Personal credit lines typically have a variable interest rate.

•   Student loans Education loans are used to cover the cost of college tuition and expenses. Both federal and private student loans are unsecured. However, student loans usually carry more restrictions and payback instructions than other types of unsecured loans.

•   Credit cards Like a personal credit line, credit cards are a type of revolving loan that lets you access money up to a certain limit as you need it and only pay interest on the amount you borrow. While secured credit cards are available, most consumer cards do not require collateral.

Why Choose an Unsecured Personal Loan?

Here’s a look at some of the benefits of unsecured personal loans.

•   Fast processing time It often doesn’t take long to get the lump sum of money in your hands — often just a few days or so.

•   Consistent payments Personal loans are a type of installment loan, which means payments will be fixed and follow a set schedule.

•   Less costly than credit cards With good credit, interest rates on unsecured personal loans are typically lower than interest rates on credit cards.

•   Flexibility An unsecured personal loan can be used for almost any purpose, including credit card consolidation, a large purchase (like an appliance), a wedding, travel, medical expenses, home repairs, and more.

•   No collateral You don’t need to put anything of value at risk of repossession in order to secure the loan.

Applying for an Unsecured Personal Loan

Before you apply for an unsecured personal loan it’s a good idea to check your credit score, since it will play a role in your loan eligibility and interest rate.

Next, you’ll want to research and compare lenders, including banks, credit unions, and online lenders. It can be a good idea to compare loan amounts, interest rates, terms, and fees. Also check loan requirements, if they are available. Some lenders have a minimum credit score or income requirements.

In some cases, you may be able to pre-qualify for a personal loan, which lets you see the loan terms you may qualify for. This involves a soft credit check, which won’t impact your credit.

Once you find a loan you like, it’s time to officially apply. Often, you can do this online, though some lenders may require you to apply in person. Either way, you’ll need to provide personal and financial information (such as your name, home address, and employment information). In addition, you may need to provide the following documents:

•   State-issued ID

•   Proof of residence

•   Proof of income (like a bank statement or pay stub)

•   Tax return

Once you submit your application, you may receive a decision within a few minutes or a few days, depending on the lender.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

For some of life’s many curveballs — or opportunities — the occasional need for an unsecured personal loan might come up. Unlike a secured loan (like an auto loan, mortgage, or car title loan), an unsecured personal loan doesn’t require you to provide anything of value to guarantee it. You qualify based only on your ability to repay the borrowed amount to the lender.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Owning a small business can mean keeping a lot of plates spinning, including making sure the cash is flowing during fluctuations in income and sales.

You may need to buy more materials, pay additional workers, improve your physical location (say, something breaks), and deal with other expenses. And, because you are a small business, it may all be on you to manage this.

At times, you may need a little outside help to cover costs. You may know about long-term business loans, which can be used for borrowing large sums and take many years to pay off, but how about short-term business loans? Here, you’ll learn more about them, their pros and cons, and whether they might be right for you.

What Is a Short-Term Small Business Loan?

A short-term small business loan is a loan that is designed to help small businesses maintain cash flow and cover small expenses. Because they are meant to be paid off on a shorter timeline (usually within three to 24 months) than long-term loans, they tend to have higher interest rates and can be secured very quickly. Basically, they can get you cash fast.


💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

What Can You Use a Short-Term Business Loan for?

There are several common uses for short-term loans. A popular one is to cover project start-up costs. If your business is launching a new product or service, a short-term loan can help you avoid disrupting your business’s cash flow.

They can also help bridge cash flow gaps related to uneven sales or seasonal effects, cover emergency repairs, and purchase discounted inventory that you’re confident will sell fast and at a profit.

A short-term loan can also help small businesses take advantage of unexpected growth opportunities by giving them the capital they need to keep production running in a short time period.

Recommended: What Are Financial Hardship Loans?

What Are the Drawbacks of Short-Term Business Loans?

In addition to high interest rates, short-term loans often require frequent repayments. Instead of the customary monthly payments that come with a lot of loans, short-term business loans often require weekly, and in some cases daily, repayments. While these payments tend to be small, they can be difficult to manage, particularly if your business has uneven sales or a lower cash-flow.

There’s also a risk of accumulating debt when using short-term business loans. Because they can be so easy to get (note: there are still eligibility requirements for these types of loans), using them could potentially lead to a business owner relying on this type of small business debt financing.

This could lead to a debt trap where someone would continue rolling over their short-term debt instead of paying it off on the predetermined repayment timeline. Ultimately, rolling over the debt means the business owner would accrue significant interest if they weren’t able to pay the short-term business loan within the initial term.

Recommended: Typical Small Business Loan Fees

What Alternative Financing Options Are Available?

There are a number of alternative financing options when you need cash for your company.

•   A business credit card is another way to cover small expenses that you plan to pay back quickly. On the flip side, business credit cards can come with high interest rates. And credit card debt is considered “revolving,” which involves borrowing against a credit limit, as opposed to paying off your debt on a defined term.

•   Short-term lines of credit can help you manage day-to-day cash flow, too. Lines of credit can help provide flexibility for business owners. You can borrow up to a set amount of money but are only required to pay interest on the actual amount of money that you borrow.

You can then borrow and repay the funds on a payment schedule similar to how a credit card. Similar to credit cards, this is considered a “revolving debt.” Short-term lines of credit may come with maintenance fees. And the interest rate could go up if you fail to pay on time.

There are many financing options available to help pay for your business expenses. Short-term business loans can help you get the cash you need for your business quickly, and pay it off on the predetermined schedule, or add additional payments as your cash flow picks back up again.

Recommended: Business vs. Personal Loan: Which Is Right for You?

About SoFi Personal Loans

While you cannot use a personal loan for business expenses, there may be times in your life that a personal loan is appropriate; say, if you want to consolidate your credit card debt (which could free up funds for your small business). In those situations, see what SoFi offers.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re getting divorced, you are going through a major upheaval on many fronts, including your financial life. You may wonder (and worry) about how your debt will be managed. For instance, will you wind up responsible for what your soon-to-be former spouse owes?

While the following information can’t take the place of consulting an attorney, it can help answer some of the most commonly asked questions as you navigate the divorce process. You’ll learn smart strategies for managing your debt as you move through your divorce.

Community Property vs Common Law Property Rules

First things first: Know that states generally follow either community property rules or common law property rules.

Community property states include:

•   Arizona

•   California

•   Idaho

•   Louisiana

•   Nevada

•   New Mexico

•   Texas

•   Washington

•   Wisconsin.

•   If you live in Alaska, you are in what’s known as an “opt-in state.” You and your spouse may have signed an agreement making your assets community property, but if you didn’t sign this agreement, Alaska follows common law property rules, as does every other state excluding the nine states that adhere to community property law.

If you live in a state where community property laws apply, both spouses are typically responsible for debts incurred while married. In fact, most debts are considered to be the responsibility of the “community” (the two married partners) even if only one of them signed the paperwork.

After a legal separation takes place, debt in these states is typically owed only by the person who took on that debt. Exceptions are made if the debt was taken on, pre-divorce, for the following reasons:

•   To maintain a joint asset, such as a new HVAC system on a home

•   To purchase family necessities

•   Or if the couple keeps joint accounts.

But what if one or both members of a married couple took out student loans before the marriage? In this case, the debt very well might not be considered part of community debt, although it could if the spouse signed on as a joint account holder.

If your state follows common law for property, debts taken on by one spouse are, typically, solely that person’s debts. Exceptions can include ones that benefit the marriage, such as childcare, food or clothing, and shelter or household items considered necessary.

Both parties are typically responsible if they both signed a contract agreeing to make payments, or if both names are on a property title to property or a shared account. This can also be true if both spouses’ income was considered when a creditor was making a lending decision.


💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.

End of Debt Accrual

When two people decide to go their separate ways, a crucial question to have clarified is when, exactly, during the separation/divorce process will you stop incurring marital debt in your state? In California, as one example, a person stops being responsible for his or her spouse’s debt on the date they separate. Every state is different so it is best to consult with an attorney.

Note that, even though state law may draw the line on your liability for a spouse’s debts because of separation or divorce considerations, creditors may still have a legitimate case for pursuing payment from you if repayment of the debt falls behind.

Plus, let’s say that according to the divorce decree, your soon-to-be ex-spouse will be responsible for payments made on a credit card. If your name is on that credit card, the court would order your ex-spouse to make payments. However, if he or she doesn’t actually make the payments on time, it can still affect your credit in a negative way.

Talk to your attorney about options available to get your name off of any accounts with debts assigned to your ex-spouse, including having your ex-spouse refinance a loan so that it is solely in his or her name. You and your ex-spouse could agree to each ask creditors to remove one another’s names according to the dictates of the divorce decree.

Recommended: Budgeting Tips for Life After Divorce

Additional Considerations

Courts may assign debts that are considered necessities to the party believed to have the ability to pay them. This may or may not be divided equally, especially in common law property states where the goal is equitable division, rather than equal division of property.

•   No matter which one of these legal structures your state follows, debt typically follows the asset. In other words, if you get a car, you’ll probably also be responsible for paying it off. This also means that, if you end up with more property than your ex-spouse after the divorce, you may be taking on a greater percentage of the debt.

•   If you and your spouse signed a prenuptial or postnuptial agreement that lays out division of debt in case of divorce, your situation probably won’t mirror the typical divorce in your state.

•   Because laws about divorce and debt responsibility differ by location, it’s important that you hire an attorney who is experienced in the laws of your state. Some couples find that using a mediator to amicably divide debts and assets is preferable to having a judge make the calls. Some mediators are also attorneys, which can be helpful.

Managing Debt After a Divorce

The cost of divorce, emotionally and financially, can be significant. Once the dust clears after a divorce, you’ll need to take stock of what you owe, balance-wise, and what monthly payments you are responsible for. You may discover that payments are higher than what you can comfortably afford each month, now that you’re only relying upon just one income.

In that case, are there any loans that you can pay off and still have enough of a savings cushion in the bank? You might, for example, have a loan with a relatively high monthly payment but, if you only have a few payments left, paying off the loan may help. Or maybe you can draw from savings to finance the fees related to divorce.

If not, you might consider consolidating your high-interest credit cards and loans into one payment through a lower-interest personal loan. Consolidating debt with a personal loan could significantly free up cash flow, right when you need it after a divorce.

Recommended: How to Use a Personal Loan for Loan Consolidation

Paying Off Debt With a SoFi Personal Loan

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This article is not intended to be legal advice. Please consult an attorney for advice.

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It’s no secret that many Americans are carrying high-interest debt. Cumulative credit card debt passed the $1 trillion mark in the second quarter of 2023, a new record, and the average person is toting around almost $8,000 in debt.

These are daunting figures, to be sure, and for those who are living paycheck to paycheck, without money in the bank, getting debt-free can feel like an impossible dream.

But it doesn’t have to be. There are ways to wrangle what you owe into submission, such as budgeting well and snagging lower interest rates. Read on to learn some effective tactics for paying down and then paying off your debt.

Begin by Creating a Budget

Note that this is suggestion #1. A budget is key to paying off debt when you don’t have a lot of money, because it gives you a bird’s-eye view of how much income you are bringing in and how much you are spending (and where).

Living day to day and not knowing where your money is unlikely to be a good debt payoff path. When you see your spending habits on a monthly spreadsheet, it can be a powerful revelation. You’ll probably realize things about your finances that you never knew before.

There are many different budget methods. One of the most popular is the 50/30/20 budget rule, which helps you allocate 50% of your take-home pay to needs, 30% to wants, and 20% to savings and additional debt payments. That last category can really help you bring down your debt.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Defining “Broke”

Being broke means having absolutely no money. More than likely, you do have money; you’re just overspending what you earn or maybe spending what you don’t have (on credit cards).

It can be easy to free up some money if you’re already earning it. Rethink money-draining activities like eating out too often, buying a coffee when you can make it at home, and perhaps spa or gym memberships when you can work out in cheaper ways (walking, running, workout videos on YouTube). Maybe you can save on streaming services by dropping a platform or two.

Increase Your Income

If you are carrying debt and don’t have money in the bank, perhaps it’s time to think about how you could bring in more cash. You might look for a new job, train up for one that pays more. You might sell your stuff that you no longer use or need. You could find a part-time job or side hustle; perhaps driving an Uber or Lyft. If you have a hobby (making jewelry, gardening, or fixing cars), you may be able to turn that into a money-making side business.

Change Your Spending Habits

Yep, it’s easier said than done, but keep your eyes on the prize: being debt-free. You might identify your spending triggers, such as shopping when you’re bored, and find free or cheap ways to keep yourself occupied. Or recognize that lifestyle creep can prevent you from paying down debt: That happens when you get a raise or earn extra money and spend it instead of saving it. Also be on the lookout for FOMO spending: When you overspend because you have “fear of missing out” on what friends, coworkers, or social media influencers are doing.

Say No to Temptation

Yep, it’s easier said than done, but keep your eyes on the prize: being debt free. That means saying no to expensive vacations, a new car, eating out, buying expensive gifts, going regularly to the nail salon, buying fancy new clothes, living in a higher-rent apartment, and wasting electricity. There are plenty more suggestions, but you get the idea.

Automate Your Savings

Take advantage of technology, and set up recurring transfers from your checking account into savings just after you’re paid. By automating your savings this way, you can build up some money in the bank and get past the “I’m broke feeling.” Even $20 or so will accumulate and make a difference. Simply set it and forget it.

Establish an Emergency Fund

That automatic-deduction savings account can double as your small emergency fund. Use it only when needed. Train yourself not to dip into it otherwise. If an emergency does arise, you might possibly be able to cover it with the money you’ve saved from this fund, and you wouldn’t have to use your credit card yet again.

Apply for a Lower Interest Rate

High-interest rates can make it very hard to get out of debt. Most of your minimum monthly payment goes to those interest charges, not your principal debt. Ask your credit card issuer if they can lower your rate to keep your business.

If it’s a no-go with your credit card company, you may want to look into a balance transfer credit card, which can give you zero-percent interest for a promotional period (usually 18 months or so), helping you pay off debt.

Consider a Personal Loan

Consolidating your credit cards into one low-interest personal loan could be your first step in the journey away from being broke.

With a (hopefully) lower interest rate and a fixed monthly payment, you can always know what you’re paying. That’s good for your budget. It can help make it easier to pay off your high-interest credit cards and loans and greatly simplify your life.

You can figure out ahead of time how much money you could save in interest payments by using a personal loan calculator.

The Takeaway

As you work towards paying off debt, even when you have no money in the bank, stay motivated. Pat yourself on the back for making small bits of progress. It may take time and a variety of tactics, such as budgeting wisely and bringing in some extra cash, to get to your goal.

The option of using a lower-interest personal loan to pay off credit cards is another tactic that can help you crush your debt.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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The average credit card debt for someone in their 30s is $4,110, but that only tells part of the story about what America owes on their plastic.

Credit card debt in America is a significant issue, with combined balances topping $1 trillion in the third quarter of 2023. You probably are aware that credit card debt is high-interest debt and can be hard to pay off.

If you are wondering how your balance compares to those of other people your age, to see how you stack up, read on. What follows is a decade-by-decade review of what Americans owe. Whether your debt is less than or more than the norm for your age group, you could likely benefit from paying it off, which is why you’ll also learn smart tactics for doing so below.

Credit Card Debt Ages 30 to 39

Welcome to your 30s, which can be a time that many people are establishing their adult lives. What does that mean? Possibly home ownership (or outfitting your rental home), having a family and paying for the kids’ expenses, traveling, dinners out with friends, and maybe new clothes because, congrats, you snagged a new job.

Some of these changes will impact your overall debt by age, but consider just your debt related to using your plastic. Your evolving lifestyle can cost you.

The average credit card debt for those in their 30s is $4,110, significantly more than the $1,462 owed by people ages 18 to 29. You should consider not only how this figure can impact your overall financial life, but also how it can affect your credit rating. You’ll want to take note of your credit utilization ratio, or how much of your credit limit your balance represents, as you work to keep your profile in good shape. Financial experts suggest this number stay at or below 30%.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Credit Card Debt Ages 40 to 49

Americans between 40 and 49 have on average, $5,373 in credit card debt, which is the highest for the age groups reviewed here. Many Generation X-ers have bought houses, cars, and started families. They are increasingly consuming and, as life gets busier, growing financial demands can encourage the growth of credit card debt.

As consumers are more and more stabilized in their lifestyle and careers, they tend to grow more comfortable spending money they can’t immediately repay. Additionally, at this age, people may be focused on financing children’s education, which can make paying off their credit card balances a lesser priority.

Credit Card Debt Ages 50 to 59

This age group owes an average of $5,085 in credit card debt, a bit less than those in their 40s. Many people in their 50s may be over the crest of their expenses as a parent or as a homeowner; perhaps their kids are out of college and they’re happy with their house as is.

However, as time passes, medical expenses can grow, and those can be put on their credit card and grow their debt.
What’s more, saving for retirement is likely to be a primary focus at this age. For those trying to fatten up their nest egg, paying off credit card debt may move to the back burner.

Recommended: Tips for Using a Credit Card Responsibly

Ways to Pay Off Your Credit Card Debt

As you plan to pay off your credit cards, it’s important not to underestimate the challenges of your mid-to-late 30s. With growing responsibilities and increasingly complicated finances, it can be easy to fall into debt.

It’s important to organize your budget in a way that allows you to make monthly payments to reduce and eventually eliminate debt while still accumulating savings. Also, knowing when credit card payments are due and paying them promptly is an important facet of maintaining your financial wellness.

•   One strategy that may be worth trying is the debt snowball method, where you prioritize repayment on your debts from the debt with the smallest amount to the debt with the largest amount, regardless of their interest rates. (While still making minimum payments on all other debts, of course.)

When you pay off the debt with the smallest amount, focus the money you were spending on those payments into the debt with the next lowest balance. This method builds in small rewards, helping to give you momentum to continue making payments. This method is all about giving yourself a mental boost in order to pay off your debt faster.

The idea is that the feeling of knocking out a debt balance — however small — will propel you toward paying down the next smallest balance. The con, however, is that you could end up paying more interest with the snowball method, because you’re tackling your smallest loan balance as opposed to your highest interest debt.

•   The other popular payoff method, the debt avalanche method, encourages the borrower to pay off the loan with their highest interest rate first. While you don’t get that psychological boost that comes with knocking out small debts quickly, paying off your highest interest loans first is the more cost-effective solution of the two.

•   Another option to consider is to apply for a personal loan. Personal loans are loans that can be used for almost any purpose, whether that’s home improvement, covering unexpected medical expenses, or paying off credit card debt.

Personal loans can be a way to get ahead of debt, since interest rates are typically competitive, especially when compared to high-interest credit cards. A personal loan allows you to consolidate debt — simplifying multiple monthly payments with different credit card companies into one monthly payment.

•   Another strategy to pay off credit card debt is, of course, to cut down on expenses and tighten your budget. When it comes to paying off debt, organization is key.

Pick one of the different budgeting methods that suits you best. Make sure you are tracking both your income and your expenses. Take a look at your monthly purchases and try categorizing them into different areas. With some strategic planning, small changes can add up to make a big difference.

Using a Personal Loan to Pay Off Your Credit Card Debt

If you decide that a personal loan is your best option, shop around, and see what kinds of offers you qualify for from different lenders.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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