2023-01-24 21:00:12

Could a Personal Loan Bail You Out if Inflation Persists?

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By The Motley Fool

Image source: Getty Images

From the start of 2022 through the end of it, consumers had no choice but to grapple with soaring inflation. As a result, many people racked up scores of debt on their credit cards. A lot of people also had to continuously dip into their savings accounts to make ends meet. And now, some consumers are looking at empty bank accounts as a result.

Unfortunately, we're not done with rampant inflation. Though living costs have come down a bit in certain categories (notably, gas) compared to mid-2022, things are still more expensive than usual. And it may be quite some time until inflation levels drop to a notable degree.

Discover: These personal loans are best for debt consolidation

More: Prequalify for a personal loan without impacting your credit score

If you're having a hard time keeping up with your living costs in light of inflation, you may be thinking of getting a personal loan to buy yourself some leeway. But is that a good idea?

Borrowing money right now might backfire on you

A personal loan can be an affordable way to borrow money when you compare it to other options, like running up a balance on a credit card. But one thing you should know is that right now, borrowing costs are up across the board, whether you're looking at an auto loan, a mortgage loan, or a home equity loan. And so if you take out a personal loan, you might get stuck with a higher interest rate than you'd like -- even if you're a borrower with solid credit.

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