If you are an avid user of credit cards, it can be a tedious job to keep track of all the payments for each of your credit cards. The dilemma of paying the whole bill amount on the due date or just paying the minimum balance will always be prying in your head. The most common questions will be which bill to pay first and why. It may be the credit card with the highest interest rate or it may be the credit card with the highest bill amount.

Taking a personal loan, for this reason, might be the solution to all the problems related to credit card debt

You can use a personal loan to pay off the credit card debt as it has a lower interest rate and money can be saved on the interest charges that are to be paid. Let us take a look at the advantages and disadvantages of using a personal loan.

Benefits of Availing a Personal Loan for paying the Credit Card Debt

  • Debt Consolidation

If you have multiple credit cards, then it is very difficult to maintain a record of all the payments to be made and the due dates for all of them. The interest charges and other penalties related to credit card debt are huge and it may lead to an unnecessary outflow of money for you. But, if a personal loan is taken, then the debts for all these credit cards can be consolidated and thus the interest rates also become lower. The loan that is availed can be paid off in EMIs that are decided as per your convenience.

  • Credit Score

A personal loan can improve your credit score if you settle all the debts in one go. Since the debts are settled in time and the payments are also made, thus the credit score improves after taking a personal loan.

  • Low-Interest Rates

The interest rates on personal loans are lower than the interest rates charged on credit cards. Thus, it is always cheaper to avail of a personal loan than to purchase anything with credit cards. You will need to go through a lot of data and select the right personal loan as per your requirement.

  • Loan Repayment Tenures

With personal loans being used as instruments to pay off credit card debts, the loan repayment tenures for these are flexible. Banks and NBFCs generally allow a period of around one year to five years for the repayment of the loan. 

  • Quick Disbursal

Since the disbursal of personal loans is quick and fast, it is easy to use the funds immediately for the purpose that you need. It takes around forty-eight hours for the disbursal process and thus the funds can be applied to the cause that is underlying for taking a loan.

  • Lack of Commitment

Borrowing from a family member or a friend may hamper your relationship with them. On the other hand, if you borrow from a formal source or a bank and NBFC, it does not have any personal commitment to you and it thus becomes easier to pay off the loan without any bias. Thus, one should always borrow from a formal financial source.

  • Online Application

The application for personal loans nowadays is very easy. The application can be done online and the verification process is also hassle-free. The application process has become user-friendly after the online application has started.

  • Prepaid Loan Options

You may have an option to prepay your loan while availing a personal loan. The prepayment of your loan might attract some penalties or charges but they may also help you to decrease the interest cost of the loan. The prepayment option will also help you to pay off your liability faster and hence become debt free soon.

Cons of Taking a Personal Loan

While we can see that availing a personal loan might have a lot of benefits, on the other hand, we should evaluate the disadvantages as well

  • Increase in Debt

Taking a personal loan might affect the debt that you already have in your portfolio. There will be an increase in the debt and this might be seen as a downside for the portfolio. The debt will increase and may also have a negative impact on your credit score.

  • Personal loans Have Charges

Let us not forget that personal loans have charges too. The non payment of dues may lead to penalties and charges for you. Compare all the charges that are liable to you in case of any non-payment amongst all the loan lenders.

  • No Guarantee for Lower Interest Rate

Lenders cannot guarantee that the interest rates for personal loans will always be lower than the credit card interest rates. Hence, you cannot always rely on the fact that personal home loan rates are always lower than the credit card interest rates.


In the above article we have seen that the benefits of taking a personal loan supersedes the cons of it. Therefore one might infer that taking a personal loan will always be beneficial. However, a loan taken to settle another loan should be availed only after careful evaluation of all the facts. The best way to avoid these debt avalanches is to have a strict control over your spending habits. Credit card debts should never be ignored and accumulation of the same should be avoided.