Should I Use Personal Loan to Pay Off Credit Card Dues?

Credit cards benefit those who wish to make purchases without carrying cash everywhere or do not have funds for immediate use. However, many people tend to make extensive use of their credit cards without realising that they would have to repay the amount spent. Moreover, the annual percentage rate (APR) for most credit cards is between 30 and 40 per cent. It means that the remaining amount continues to grow, if not paid on time. Increasing debt trap can be hard to get rid of, if not repaid in full. Many people opt for the balance transfer option, which means switching the outstanding balance on your existing card to a new credit card. This mostly happens if the interest charges on the new card are lower than that what you are paying on your existing card.

Taking a Personal Loan to Repay Debt

Among the numerous ways available to pay off credit card dues, taking a personal loan is deemed as the most feasible option. There are several reasons why you should take a personal loan to pay off your credit card dues.

These include:

Consolidated debt: There may be many reasons for your personal loan requirements, one of them being the consolidation of existing debt. If you are struggling to repay your debt or liability stemming from numerous loans, taking a personal loan to repay them all at once may help. Lending institutions never inquire (but you cannot use the amount for illegal activities) about the purpose for which you are taking the loan, which means that you can use the loan amount for any reason. You may borrow an amount as low as Rs. 50,000 to as high as Rs. 25 lakhs, thus, allowing you adequate amount to repay your credit card debt.

Reasonable interest charges: Depending on your choice of the lending institution, you can get affordable interest rates which are usually lower than credit card interest rates. Moreover, your interest rate depends on your credit score. Those enjoying a good credit history will be required to pay lower interests, thus, making the personal loan affordable and easy to repay. Those approaching the lender for pre-approved loans gain from lender’s reduced interest rates as their previous loan repayment history makes them eligible to borrow a higher amount at much lower rates.

Minimal documentation: You do not have to go through an extensive documentation procedure to avail personal loans. Just submit the necessary documents showing proof of your identity and address along with bank statements or last three months’ salary slips as evidence of your income along with the loan application form.

Choice of loan tenure: The loan tenure available to repay your loan extends from six months to five years. Depending on your financial circumstances, you may choose to repay your loan early or return the principal amount along with interest over a prolonged period. Though a longer loan tenure means small equated monthly instalments (EMIs), it also involves more amount as repayment due to the increased interest component involved. Preferring a small loan tenure is better though a lot depends on your choice and financial outlook.

Quick disbursal: Imminent need for money can spur one to opt for personal loans. Post submission of your loan application along with your documents, it takes only a few hours for the lender to approve the loan amount and disburse the amount to the account of the intended borrower. Those seeking pre-approved loans avail the benefit of immediate loan credits in their savings and current accounts.

Online application possible: You can go to the nearest branch of your lender and apply for a loan. Alternatively, you may apply for an instant personal loan online but logging on to the lender’s website or click on the company’s mobile app. For the personal loan that you require, you must submit an online application along with soft copies of your necessary documents. The lender post verification of your loan requirement and the validity of the documents submitted will approve the loan amount. You can avail a loan with just the click of a button instead of applying with hard copies of the loan application and documents.

Easy availability and affordability are the foremost reasons for which many people seek personal loans and repay their lingering credit card debt with the amount received.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.