What Are the Pros & Cons to Use Personal Loan to Repay Your Credit Card Dues?

Credit cards are an extremely reliable funding source, which can be used by you to spend on utility bills, shopping, vacation trips or exigencies. With the assistance of a credit card, you can make your expenditures now and pay for the same later before the actual deadline. However, if you do not pay the credit card due bill and clear off your dues in full and timely, the credit card issuer will levy additional interest and may incur a late payment fee. Finance charges on a credit card are very high at times anywhere between 23 per cent and 52 per cent per annum. Paying only the interest often chips out a massive chunk from your income and becomes a constant recurring nuisance for you.

In case you are under any kind of burden owing to credit card debts, you might be wondering about the distinct options available for you to be out of debt and figure out a way from high levying credit card dues.

One of the prudent ways is via a personal loan. However, is it really the correct thing for you to go forward with?

Availing a personal loan for paying off your credit card dues

When you are looking out at options, you might think that availing a low-interest-rate personal loan for paying off a high levying credit card due may sound like an excellent plan. However, while availing a personal loan, you must give thought to all the hidden conditions, in addition to the rate of interest and payment duration. Before considering a personal loan to repay your credit card dues, you must factor in the repayment tenure and the rate of interest being offered by the lender. For instance, suppose you decide to avail a Bajaj personal loan and the Bajaj personal loan interest rates may begin from 11 per cent per annum onwards, and hence as it falls within your repayment capacity, you decide on opting for the same. Note that once you opt for this loan, you can check the Bajaj personal loan status by visiting its website.

Before opting for the personal loan option to pay your credit card debts, you must consider the repayment tenure, and rate of interest offered by the personal loan lender. There are a few advantages of opting for a long-term personal loan as well. A long-term loan lowers the monthly payment and hence being salaried, you can repay the interest constituent more conveniently. In case you are not able to afford the high monthly instalments, a personal loan with higher repayment tenure can be the appropriate choice for you. You just need to form a good strategy to clear your debts and select the personal loan that matches your requirements.

What are the benefits of availing a personal loan through which you can clear off your credit card debt?

Low-interest rate

Usually, the personal loan rate of interest is lower as compared to credit card rates. In a few cases, the rate of interest on a personal loan is nearly half of the credit card finance charges. Ensure to compare the APR (annual percentage rate) of distinct loans from various other providers. With a lower APR, you can for sure save a great lot of money each month.

Consolidating the loans

One of the major issues of salaried is that it is tough for you to take out sufficient time to form a plan to clear your debts. Additionally, the stress and tension at work may often make you miss out on things. In case you hold more than one credit card, then it may be very challenging for you to keep track on the payment dates, and the bill amounts. The accumulated debts on each card may be difficult for you to manage without creating a well-thought-out plan or strategy. Thus, you can avoid all such hassles by simply consolidating all your debts on credit cards into a single loan i.e., a personal loan.

By availing a personal loan, you can simply repay all the other loans and just worry about the prevailing personal loan. In place of paying to multiple sources, you may just make a single repayment each month, which may both be simple to note and even easier to manage.

Also Check: Bajaj Personal Loan Status

Repayment date

At times, you might feel that you never can get out of your debts, and you can never be free financially with hefty payments accumulating each month. You continue making such payments. When it is to a personal loan, it is a must for you to set a predetermined term for payment duration and check all the essential terms and conditions alongside the rate of interest levied. Thus, with a personal loan, you can have a definite plan to clear off your payments, which certainly will push you hard to clear off your dues quickly.

In case you avail a personal loan to meet your credit card dues, you must be aware of the monthly payments that you must make to become debt free within payoff tenure.

Credit score

Loans have the potential of ameliorating your credit score. Once you have successfully cleared your debt within the due date, you may find that the score will stop its free fall and ameliorate with time as you clear off your credit card debt and the loan within time. Thus, if you are incapable of making the payment of credit card due on time, you must opt for an affordable personal loan to be able to clear your monthly debts within time and maintain a good credit score.

What are the cons of clearing off your credit card dues using a personal loan?

Availing a personal loan to easily clear off your credit card dues is neither as rosy nor as simple as it may sound. As you might already have availed a lot of loans, there are chances that your score may be low and thus applying for a loan like a personal loan might be tough.

Opting for a personal loan, which is long-term in nature may mean you may have to pay off your interest for an extended period. Hence, the overall interest paid sums up to more than the credit card due interest, and you might end up paying more as compared to your credit card due.

Also, you may consider closing a few of your credit cards which previously were in debt after consolidating through a personal loan. However, doing so considerably impacts your credit score. Thus, in place of removing the credit cards from your stock, ensure to manage the same efficiently.

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