Credit cards are one of the most popular means of paying for transactions. The ‘buy now pay later’ concept of the card makes it quite attractive as individuals having a shortage of cash can also use the card for making transactions. Moreover, the card also allows you to pay a minimum amount due and revolve the remaining outstanding balance to the next month if you are in a financial crisis. Though this revolving credit facility seems like a good way to delay paying your credit card bills, what you overlook is the high-interest charges which are applicable. Revolving credit facility incurs an interest on the entire outstanding balance. The interest rate goes up as high as 40% and you inevitably rake up a high credit card debt. If you have multiple credit cards, the debt becomes too high to pay off. But, there is a solution to the mounting credit card debt you face. You can take a personal loan and pay off the entire debt in one go. Yes, a personal loan helps you to pay off your credit card debts. What’s more, it also has various advantages. Do you know what? Let’s find out –
You can consolidate the entire debt and pay it off in one go
When you take a personal loan for paying off your credit card dues, you get the benefit of consolidating the outstanding balances of all your active credit cards. You can sum up the total debt outstanding to your name and then pay off the debt by availing a personal loan online. Since the debt is consolidated and paid off you are freed from the task of remembering the due dates of multiple credit card bills. You just have to remember the EMI payment date of the personal loan which you availed. You can be freed up of that too if you automate your EMI repayments through Standing Instructions or ECS facility in your bank account. So, a personal loan brings together all your debts under one head and makes it convenient for you.
You save a fortune on interest payments
Do you know that credit cards have the highest interest rates associated with them? Interest rates on your credit cards go as high as 40% per annum. Therefore, your credit card dues multiply because of the incidence of the high-interest rate. Personal loans, on the other hand, have very low-interest rates compared to credit cards. The interest rate for personal loans ranges from 10.75% to 22% depending on your eligibility. Thus, by substituting your credit card debts with a personal loan you lower your interest outgoes considerably.
You can control your EMI payments
When you opt for a personal loan, you have complete control on your EMIs. You can increase or decrease the loan tenure to arrive at the EMIs which would be most affordable for you. Credit card debts don’t give you this control. Under your credit card,you have to pay the minimum amount due to carry forward the remaining balance to the next cycle. This amount might not entirely be affordable especially when you are in a cash crunch. So, take a personal loan and control the EMIs which you pay for your debts.
You can improve your credit score
Even though revolving credit facility is available on your credit cards, the facility, when availed, reflects badly on your credit score. It depicts that you are not paying your credit card dues regularly and are building up debt. This depiction hampers your credit score and lowers it. In a personal loan, the EMIs payable are a part of the loan. They, therefore, have no effect on the credit score. Thus, when you repay your credit card debts with a personal loan your credit score improves as the dues are not revolving every month. Availing a personal loan in place of a credit card has no effect on the score because you substitute one type of unsecured loan with the other.
So, personal loans are the best bet to repay your credit card debts. They do not require any collateral security and are allowed easily. You can take a personal loan online and consolidate your Credit Card debts. So, don’t increase your credit card dues any further. Avail a personal loan and clear them off.
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