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Home » Should you opt for a Personal Loan to repay your Credit Card debt? Check Here the Pros and Cons

Should you opt for a Personal Loan to repay your Credit Card debt? Check Here the Pros and Cons

Credit cards are extremely useful when it comes to purchasing, shopping, and managing finances, but if not used responsibly, they can result in growing debts along with hefty interest rates. Whenever you feel locked in a vicious loop of credit card debt with high interest rates, you may desire to take out a personal loan to recover the management of your money. Here, we’re going to look at whether getting a loan for personal use to pay off your debts from credit cards is a wise financial decision.

Last-second crises might result in rather high credit card charges. Arranging monthly payments on a credit card with an excessive balance outstanding may be tough. What should be the most beneficial thing one can do in this case? The solution is simple: apply for a personal loan to pay off your expensive credit card bills. It is a straightforward technique to resolve credit card issues. The longer you put off making your hefty credit card bills, the worse the score on your credit card will get.

Recognising the scenario.

Just before digging into the benefits and drawbacks involved in getting a personal loan to cover credit card debts, you must first assess your present financial standing. Inquire about a number of queries.

  • Do you struggle with paying the bare essential payments every month on any credit card(s)?
  • Are you holding a few credit cards with different interest rates?
  • Do you pay a lot more in interest than by lowering the original principal?
  • Is your debt from credit cards harming either your credit score or your overall economic health?
  • If your answer becomes “yes” to almost any of these inquiries, a personal loan could be a viable option.

Handling debt from credit cards can be difficult, and it may have a bad influence on your credit rating as well. During such a situation, you may be seeking an escape route. Generally speaking, there are no additional choices for managing your credit card bill payments without taking out a new loan.

What and How to Find a Way to Start

The process of beginning by applying for a personal loan to combat debt from credit cards is rather simple:

Check Your Debt: Start by looking at your credit card balances, rates of interest, and payments made monthly.
Search for Lenders: Compare multiple financial institutions and their loan products. Search for affordable interest rates with favourable terms.
Request for a personal loan: When you’ve found a financial institution that meets your criteria, complete the application form along with the required papers.
Transfer the debt you have: Once approved, use the personal loan amounts to pay off your credit card bills. You ensure a seamless and precise transfer by ensuring that you comply with the proper protocol.

Keep track of your improvement: Keep track of your debt-reducing journey and joyously observe achievements along your path.

Keep yourself focused: Whenever you complete payments, ignore the urge to incur a fresh credit card debt. Pay attention to getting debt-free.

The positive aspects(Pros) of taking a personal loan to pay off credit card debts are:

  • Personal loans usually offer lower rates of interest than credit cards.
  • Consolidating your debts from credit cards into a personal loan may assist you in saving a lot of money on interest costs.
  • Personal loans include set payments made monthly, making it a lot simpler to set up a budget and arrange your financial affairs.
  • Compared to credit cards, where the bare minimum payments might change and extend debt payback, a personal loan offers consistency.
  • Personal loans come with a set duration, which implies you have a set deadline for turning debt-free. This may urge you to stick to your repayment schedule.
  • By repaying the debt you owe on credit cards with personal loans, you can reduce your credit utilization ratio and, therefore, improve your credit score over the long run.

The cons of paying off credit card debt with a personal loan

  • Applying for a personal loan to pay off debts from credit cards is neither pleasant nor as simple as it seems. Because you have previously taken out numerous loans, your rating on the credit bureaus is likely to be poor, making an application for a personal loan problematic.
  • Taking out a long-term loan for personal use requires you to repay the interest over a longer period of time. As a result, the total interest paid will exceed the rate of interest charged on the debt you have on credit cards, meaning that you might ultimately end up spending over the credit card amount.

Check the table to have a brief knowledge about the Pros and Cons

  1. Might serve as a monetary source for significant purchases.
  2. Typically, it provides a cheaper interest rate compared to a credit card.
  3. Offers funds in a lump-sum amount.
  4. Have dependable set payments.
  1. Normally, this includes an additional service charge.
  2. Sometimes it can involve extra costs that add up.
  3. Do not grant additional credit after repayment.
  4. Offers no rewards.

Strategies for Responsible Use of a Personal Loan to Pay Off Credit Card Debt

Whenever you’re having difficulty paying off debt related to credit cards, personal loans may be beneficial for you to consolidate the debt and clear it off faster. Anyway, it is of the utmost importance to make use of personal loans for paying off credit cards wisely to prevent incurring further debt.

Following are a couple ideas concerning how to use a personal loan to pay off the debt from credit cards wisely:

Learn about the Loan Conditions: Prior to applying for a personal loan, ensure that you are aware of the rates of interest, charges, and payback conditions. You are also responsible for making sure that the cost every month is manageable for you.

Apply the Money from the Loan to Clear Off Your Debts on Credit Cards: Make use of the loan money to pay off the debt you owe on your credit cards completely. It will allow you to stay away from paying excessive rates of interest on balances on your credit cards.
Ensure Your Loan Installments On Time: Be certain to pay your loan installments according to schedule every month.
Set up a plan: To guarantee that you can pay repayments on loans regularly and avoid going into further debt, plan and maintain a budget.

Implementing the above steps will allow you to benefit from a personal loan to effectively pay off your debts from credit cards while getting your finances back on track.

The most effective personal loans for repaying credit card debt.
Whenever a loan for personal use seems like a good option for the reasons you’re struggling financially, here are a couple of preferred financial institutions. Solid options for consumers looking for modest loans with swift disbursement.

LenderLoan AmountRate of InterestProcessing Fee

Paysense Personal Loan

Up to 10 Lakh18% Onwards1-3%

Werize Personal Loan

Up to 5 Lakh15% Onwards1-3%

Money View Personal Loan

Up to 5 Lakh16% Onwards1-4%

IDFC Bank Personal Loan

Up to 40 Lakh10.49% Onwards1-4%

Incred Personal Loan

Up to 10 Lakh21% Onwards1-4%

Aditya Birla Personal Loan

Up to 50 Lakh14% Onwards1-3%

Finnable Personal Loan

Up to 10 Lakh16.95%1-4%

Concerns for Applying for a Personal Loan:

  • Although personal loan interest rates are usually cheaper than credit card rates, it’s important to evaluate offers from multiple lenders to get the best conditions. Understand any processing costs or penalties for early repayment linked to your loan.
  • Paying off your credit card debts with a personal loan will only make sense if you are committed to prudent financial decisions. Stay away from amassing new credit card debt along with repaying your loan.
  • Make sure the sum of the personal loan is enough to settle all of the credit cards you’re using for debt. To make this method work, you must first erase all high-interest balances on your credit cards.

How and where will you apply for a personal loan?

If you want to apply online for personal loans to repay debt from credit cards, simply complete the steps outlined below:

  1. Go to your preferred lender’s portal, pick out ‘Personal Loan’, review their eligibility requirements, and hit ‘Apply Now’. Otherwise, go to Refer Loan’s website and get an abundance of alternatives to pick out the most suitable one for you.
  2. Complete the loan application form with all of the relevant information.
  3. Attach and upload the required papers together with your application form.
  4. When your documentation and request for financing have been successfully confirmed, the agreed-upon loan amounts will be deposited into your banking account.

Anyway, while deciding on a personal loan as a solution for debts from credit cards, you must review the rates of interest and repayment conditions given by several financial institutions to ensure that you make the best decision for your situation. Taking out a personal loan to repay credit card debt may serve as an outstanding tool for achieving monetary peace and stability of mind if used correctly.

What is the best method for paying off credit card debt?

When looking for the most effective credit card debt repayment choices, one realistic method is to fulfil the bare-bones payments every month on all of your bills while diverting any additional income to the loan with the highest rate of interest.

What happens if I fail to make the necessary credit card payments?

Failing to pay your credit card bills on time may result in extra charges and a gap in your credit score. Late payment penalties and high interest rates are only the beginning. Repeated failure to make payments may result in the end of your interest-free time, a lowered credit limit, and a lower credit score. Managing regular payments is the most effective strategy to pay off debt from credit cards.

Bottom Line

Whether you are suffering from high-interest credit card bills and desire to take back control of your money, taking out a personal loan to pay them off can be a prudent financial decision. It provides cheaper interest rates, fixed repayments, and the opportunity to boost your rating on the credit report. Anyway, evaluating your financial discipline and comparing loan offers is critical. Take help from a financial planner or credit counsellor to decide whether this method aligns with your financial objectives for the future and is the best way to get out of credit card debt.

In a nutshell, taking out a personal loan to pay off debt from credit cards is a realistic and successful approach to regaining control over your finances. Hence, when you’re battling with debt from your credit cards, think about getting a personal loan from Refer Loan to help you get out of it and start living debt-free.

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