Can You Take a Personal Loan to Pay Off Credit Card Debt

A personal loan is an unsecured credit option with no usage restrictions. You can utilise a personal loan to pay off your credit card debt and clear the outstanding balance. 

Multiple lenders on Bajaj Markets offer instant personal loans  for those who meet the eligibility criteria. Such loans allow you to take care of immediate expenses. You can also use them to pay off large credit card debt on a single card or multiple cards.

The primary purpose of using a personal loan to manage credit card debt is to obtain a lower interest rate along with more favourable repayment terms. Using a personal loan for debt consolidation can be a sound financial strategy when managed wisely. 

Here are some key reasons to consider opting for a personal loan:

• Lower Interest Rates: Pay less compared to credit card interest charges.
  

• Simplified Payments: Combine multiple card bills into one EMI.
  

• Flexible Tenure: Choose a repayment period that fits your finances.
  

• Pay Beyond Minimum Due: Reduce both principal and interest faster.
  

• Boost Credit Score: Lower utilisation and timely payments can improve your score.

Bajaj Markets has a simple process of getting a personal loan to pay off your credit card debt. Below are the steps to apply for an online personal loan:

1. Click on the ‘Apply For Loan’ button on this page 

2. Choose your profession from the dropdown options 

3. Enter your mobile number and PIN code 

4. Accept the terms and conditions after reading carefully 

5. Click on ‘Proceed’ 

6. Enter or choose the following details, including PAN, Name as per PAN card, Date of birth, Employer category, Employer/company name, Net monthly salary, Email ID, Gender, and Salary credit mode (Bank or Cash) 

7. Click on ‘Submit’ 

8. Review and select loan offers based on your eligibility 

9. Provide any additional details if requested

Once all steps are completed successfully, the approved loan amount will be credited directly to your bank account.

Considering a personal loan will minimise the burden you are facing from a piled-up credit card debt. Doing so can offer several benefits, like:

• Affordable Credit

Credit cards have a spending limit, and the interest rate charged on the outstanding balance may fluctuate based on how much limit you are utilising.

If you fail to pay your bills on time, the interest on unpaid bills can quickly increase because of the additional fees and charges. 

With personal loans, you have to pay a fixed monthly EMI and often, personal loan interest rates are lower than credit card loan interest rates. So, you will pay less interest when you pay credit card bills with a personal loan.

• Streamlined Monthly Payments

Credit card debt can become unmanageable, especially when you have multiple credit cards with higher interest rates. After the approval of your application, you can use the loan amount to clear outstanding balances on all your credit cards. 

You can then pay a monthly EMI towards your personal loan and simplify the payments.

• Manage Credit Score

Every credit card has a fixed credit limit based on the cardholder's eligibility criteria and the card-issuing bank's policies. Your credit utilisation ratio will be higher if you have a large credit card debt. As a result, it can impact your credit score.

Paying outstanding balances on your credit cards will allow you to free up your credit card limit. However, be responsible while using your credit card because your overall credit utilisation ratio will still be higher until you repay the personal loan. 

Paying off credit card debt using personal loans may help you improve your credit score. However, you need to ensure you continue making prompt payments for your personal loans to maintain and improve your credit score.

Getting a personal loan to manage and pay off credit card debt may prove to be useful. It allows you to simplify payments towards a single personal loan instead of multiple credit card bills. 

You can lower the overall interest rate by choosing a personal loan with a lower interest rate. There are other ways to manage credit card debt without getting a loan to pay credit card debt:

• Use Your Savings

If you have sufficient savings to pay off all your credit card balances, you can do so. This allows you to lower your credit immediately. However, when you do this, you may not have sufficient funds to meet any emergencies that may arise later.

• Get a Balance Transfer Credit Card

Find a card issuer with a lower interest rate and a balance transfer option, and transfer outstanding balances from old credit cards to a new card. Often, balance transfer cards have 0% APR for the first few months (6 to 21 months). 

So, you can have enough time to pay your balances without interest charges. 

• Negotiate With Your Card Issuer

Those with a long-standing relationship with a card issuer can try to negotiate directly with the issuing bank to lower the credit card interest rate. Paying your bills promptly can help you get a lower interest rate, which can help you clear your debt without a new loan.