Perosnal Loan for Credit card Bills

How to use Personal Loan to Pay Credit Card Debt?

March 24, 2022 • 2287 views
Author: PoonawallaFincorp Category: Personal Loan

Credit cards are a reliable source of money to use for purchases, service bills, vacations, or emergencies. With the help of a credit card, you can make your expenses now and pay them later by the payment due date.

However, if you do not pay your credit card debt on time, the credit card issuer will charge you additional interest or late payment fees. Interest rates on credit cards are usually very high. 

If you are under the burden of credit card debt, you may be wondering about the various options available to get out of this debt. One way is to have a Personal Loan to pay off your credit card debt. Some of us turn to our friends and family for urgent funds. We may not always like it, but we do it because we believe, we have no choice left. But borrowing money from friends and family can put a strain on our relationship and put us in a bad position, especially if we cannot repay the loan on time. 

Some of us also borrow from lenders who may charge high-interest rates and need collateral to submit. If you can relate to any of these situations, it is time to consider taking out a Personal Loan to pay off credit card debt. A Personal Loan is one of the simple yet safest financial solutions that offer a high loan amount that can be used for various purposes from buying new things to paying for medical bills. Consolidating your credit card debt is also a popular reason for taking on a Personal Loan. By taking out a Personal Loan to pay off credit card debt, you can eliminate many of the monthly interest rates and combine the debt into equated monthly installments (EMIs), usually at a reduced cost. 

Personal Loan to Pay Your Credit Card Debt

Most of us use Credit Cards to purchase large or small items, and pre-planned or impulse purchases. If we do not make good use of this plastic money, we could end up accumulating debt. Failure to repay the Credit Card debt within the stipulated period may result in higher penalties. A Personal Loan can be taken to pay off your Credit Card Loan. The lender pays off the outstanding credit card debt from the proceeds of the Personal Loan, so that you do not incur any further charges or penalties. The Personal Loan can be paid off through EMIs. 

Taking Out a Personal Loan to Pay Off Credit Card Debt

Considering your options, you may feel that taking a low-interest Personal Loan to pay off credit card debt sounds like a good deal. However, when taking out a Personal Loan, you need to look at all the hidden terms and conditions. Before choosing a Personal Loan to pay off credit card debt, you should consider the repayment period as well as the interest rate offered by the lender. There are other benefits to long-term Personal Loans as well.

Long-term Personal Loans reduce monthly payments so that there is less burden on you each month. If you can afford to pay higher EMIs, a short-term Personal Loan may be the right choice for you. You need to have a good strategy to clear your debts, and you should choose a loan that fits your needs. 

Benefits Of Personal Loan to Pay Credit Card Bill

  • Low-interest Rate: Generally, Personal Loan interest rates are lower than credit card interest rates. With a low-interest rate, you can save a lot of money every month. This makes Personal Loan an effective way to consolidate debt. Just make sure, you compare the interest rates charged by different lenders before applying for it so that your credit score does not take a hit due to frequent inquiries. 
  • Debt Consolidation: If you have more than one credit card and loans on a few of them, it can be a challenge to keep a track of payment dates.Expensive debt can have a huge impact on your finances. They can affect your monthly budget as you will be spending most of your income for repaying this expensive debt. A Personal Loan can help you pay off more expensive debt with one payment. Once you have paid off this expensive debt, you can repay the loan through affordable EMIs.Therefore, you can avoid all these problems by combining all your credit card debt into one Personal Loan. Instead of paying for multiple sources, you can make one payment each month, which will be easier to remember, and easier to manage. 
  • Payment Due Date: In case you have too many credit card loans, it becomes difficult to keep a track of the due date for each of these loans.Against that, a single Personal Loan at a lower cost and with a single EMI is much easier to handle and remember. 
  • Credit Score: A Personal Loan can improve your credit score if you settle your other debts using one. After you have successfully settled your debt on time, you will find that your credit score will improve. So, if you are unable to make your credit card payments on time, you should choose affordable Personal Loans. This way, you can clear your monthly bills on time and keep your credit score healthy. 
  • Loan Repayment Tenure for Affordable EMIs: Personal Loans to pay off a credit card debt are one of the most lucrative products offered by banks & NBFCs. You can repay it with affordable EMIs, by choosing a repayment tenure that suits you. Usually, banks allow a minimum tenure of 1 year and a maximum of 5 years to repay the Personal Loan. 
  • Applying Online: Many lenders allow customers to apply online. It speeds up the whole process and allows you to access funds very quickly. 
  • Enjoy Timely Authorization: Most requests are approved on time. To prove this, you must provide all the needed documents and meet all the eligibility requirements.  
  • Enjoy the Quick Release: As soon as your application is approved by the lender, the loan amount will be credited immediately to your savings account. Products such as instant Personal Loans are known for such features. 
  • Lack of Commitment: Borrowing money from friends and family in times of disaster can put you in a difficult position to enjoy. Being financially indebted to people you know can affect your relationship if you fail to repay the loan on time. A Personal Loan allows you to repay your existing debt without having to deal with any personal obligations. 
  • Having Prepaid Options: Depending on the lender, you may also be able to pre-pay your loan after a certain lock-in period. You may be charged a prepayment fee, but your loan will get over quicker, so it makes sense to prepay if you have the funds. 

A loan for retiring another loan is an option that should be tried only after careful evaluation. The best is to be aware of your spending habits, improve them wherever necessary, and learn from your mistakes to adjust your spending habits.

Before you take out a loan, consider all your options. You can also apply for a Personal Loan at Poonawalla Fincorp where we give you lower interest rates than your credit card, which will help you to pay off your remaining credit card balances in no time.

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