Personal loans are unsecured loans provided to meet any kind of emergency financial requirement. The attractive feature of a personal loan is there is no end usage restriction. You can use a personal loan to meet medical expenses, travel, education, renovation, repay existing debts, etc. Personal loans are easy and quick funding options with low rates of interest. While using personal loans to settle existing obligations, you should understand the pros and cons of going for them.

Pros Of Using Personal Loans To Repay Credit Card Bills

Finance At Low-Interest Rates

Personal loans have interest rates lower than credit cards. The annualised percentage rate on a credit card can range from 24% to 48%. The cost of missing your credit card payment or making a delayed payment can take a toll on your finances. You would be paying more than what you used. The interest charges, late payment fees, and overdue interest add more to the existing credit card outstanding. The interest rates on personal loans start from 9%. Hence opting for a personal loan to repay your credit card bills can save you from burdening your credit profile. 

Saving Your Credit Score

Undoubtedly your credit score is the worst hit when you miss paying your credit card bills. Doing something to save your position than doing nothing is what is required to save your credit score. Personal loans can be a saviour to repay the pending payments against your credit cards. You can consider repaying your large credit card outstanding first using a personal loan to save your credit score from falling seriously.

Debt Management

It may be a real struggle to manage your multiple credit cards at one time. You may tend to miss out on the various due dates. Consolidating all your credit card dues to a single personal loan can help you to manage your finances better. You can settle all your existing credit cards outstanding and start afresh for the next billing cycle. This can give you a picture of where and how much you are spending with your credit card. You can also have control of your spending habits and use credit cards wisely.

Long Repayment Tenure

Credit card dues must be paid within the due date as per the agreement. If you fail to pay the minimum amount due within the due date, you will be charged interest and late fees for the same. Personal loans have longer repayment tenure of up to 5 years. When the loan tenure is longer, EMI is small and manageable with your finances. Borrowing a personal loan for a longer tenure to repay your credit card bills can help to balance your debts by settling gradually over a period. 

Cons Of Using Personal Loans For Repaying Credit Card Bills

Lack Of Funds

When you are going out for a personal loan to repay your credit card bills, it means that your funds are poorly managed. You spend more through your credit card than you can afford. It denotes the habit of incessant spending due to the availability of credit. Seeking a personal loan for repaying existing obligations means you are credit thirsty and the lenders may be reluctant to offer what you ask for.

Impact On Credit History

A personal loan is also a debt that must be repaid regularly. If there is any failure to repay the personal loan EMIs as well, your credit score will go for a ride. Then it becomes a herculean task to revive your credit score and revamp your credit profile. Using debts for debts must be a last resort when nothing seems to help.

A Low-Interest Rate Cannot Be Guaranteed

While the interest rate on personal loans is lower than the credit cards, it cannot be guaranteed that you will be offered a low rate of interest. Since your credit score will be hit due to non-payment of credit card bills, the lender will charge a higher interest rate than the market rate to save him from the risk of lending. This can add even more burden to the already existing debt obligations.


Systematically repaying your credit card bills can save you from trouble. You must also have a track record of your spending and ensure it matches your monthly repayment capacity. Using a personal loan to pay off your credit card bills can seem to be a convenient option to release you from the financial clutches. But it is a temporary solution where you are creating another debt to repay the existing debt. However, getting a personal loan with a longer tenure can help you plan for the finances and repay regularly.

FAQ of pros and cons of using a personal loan to pay off credit card bills

1:How to apply for a personal loan?

You can apply for a personal loan at Credit Mantri by checking your eligibility. You can also visit the lender’s official website or the branches physically to apply for a personal loan.

2:What is the minimum income requirement for a personal loan?

The minimum net monthly income must be Rs 15,000 and it varies as per the amount of loan and repayment tenure.

3:What are the processing charges on a personal loan?

The processing charges can range between 0.25% to 2% of the loan amount. Some banks also provide personal loans without any processing charges for eligible customers.

4:What is a pre-approved personal loan?

Banks and financial institutions may provide personal loans with offers to their existing customers based on their credit scores and relationship.

5:Can I pre-close my personal loan?

Yes. You can pre-close your personal loan by paying foreclosure charges as prescribed.