Many people today debate the idea of converting a credit card debt into a personal loan. Many people believe that a credit card has been a double-edged sword. It is true in many aspects but then the question arises – personal loans are also the same. But, there are major differences between the two, and in this blog we will discuss if it is a good idea to convert a credit card debt into a personal loan. Offered at a lower interest rate and flexible repayment tenure, a personal loan has also become the go-to option for covering your credit card debt. 

Converting Credit card debt into a personal loan

Personal loans are great financial tools. They are designed to allow individuals to get funds for all emergencies. So, if you have credit card debt then you can convert it in a personal loan. 

Let us look at the benefits of applying for a personal loan:

  1. Lower interest rate: Personal loan interest rates are much lower than the equated monthly instalments offered by credit cards. A credit card interest rate will range anywhere between 30% to 40% per annum. On the other hand, personal loans interest rates are offered at 18% to 24%. The difference in interest rate is one of the major reasons for taking this step.
  2. Debt Consolidation: It is just one credit card debt or multiple debts, you can consolidate all your loans into one loan. A personal loan can cover all your outstanding balances from credit cards. 
  3. EMI payment: In the case of a credit card, pay the amount used in the next month, or the interest keeps on piling up. However, in the case of a personal loan, the loan amount is borrowed in one go and the repayment has to be done in small monthly EMIs.

The EMI includes both the principal amount and the interest charged for the repayment tenure. In the case of credit cards, the high interest charged makes paying the minimum due also a challenge.

  1. Negotiable: The online instant personal loan allows the borrower the facility to negotiate on the loan terms with the lender. Based on your income, age, credit score you can earn a reasonable interest rate and repayment tenure on your loan amount. However, in the case of a credit card, such negotiation may not be very feasible.
  2. Frees up the balance: One of the major benefits of using a personal loan to consolidate your credit card debt is that it frees up the balance of your credit card. You can again start shopping and buying on your credit card. Make sure that you are not sending the available limit indiscriminately and run for further debt. This might put you in a tricky place, which will land you in financial hardship.
  3. Maintain your credit score: Too much debt on your credit card can hamper your CIBIL Score. Consolidating it with a personal loan will ensure that your credit score is not hampered. This will help you in getting any future credits and also maintain the credit limit on your card.

The above points give a fair idea of how one can utilise a personal loan to get rid of credit card debt. Various financial institutions offer personal loans to borrowers. You can either reach out to the lender via their website or apply for a personal loan through instant loan apps.

Some of the personal loan apps that can help you are:

Fullerton India instant loan app

  1. Dhani
  2. Early Salary
  3. MoneyTap
  4. Cashe
  5. Nira
  6. Credy

Conclusion

To sum it all up, if you have a plan to repay your credit card debt soon, then getting a personal loan may not be for you. Whereas, if the debt has become unmanageable, and is spread across multiple cards, then a personal loan is your best option to manage all the outstanding balance. It helps you in consolidating debt, in a simple, effective manner, with a lower interest rate as compared to a credit card.