Is it better to take Personal Loan to pay Credit card Outstanding

Different problems have different solutions; every lock has its own key, but what if you have a single solution to all your problems. Certainly, you will welcome it with both hands. Credit card exactly is such a key to all the financial problems. It is that one Ace which can be a game changer. But, every action has its equal and opposite reaction, this same applies here. Often, people take an undue advantage and use it very abruptly and land themselves into debt. Many of credit card holders are deliberately or not become defaulter. So, how to clear the debt? The best idea is to take personal loans to counter outstanding.

 Here are the reasons behind this advice

  • Lower interest rates- the rate of the interest in personal loan is way lesser than what charged on credit cards. Take personal loan which would maximum charge interest of 11-12% and pay credit card loans which has interest rate of about 45%.
  • Easy Management- If you are using more than one credit card than it would be quite hectic to track multiple outstanding repayments and to remember due dates, while taking a single personal loan to clear all the dues could reduce the hassle caused.
  • Flexibility- Personal loans has a major edge over credit card is that they can be fixed for certain amount of time tenure according to repayment capacity i.e. you could plan accordingly to repay within that tenure for example 5 years or 3 years. But, one should keep in mind that shorter the tenure, bigger the EMI and lower the interest cost and vice versa, so do proper research and planning before any decision. On the other hand, credit cards loans are to be paid on fixed time and at one go to avoid penalties and interest.
  • Credit Score- this is actually a phenomenon which is inversely proportional between loans and outstanding. Suppose, if you have a good credit score, you would get very easily personal loans and you can pay your outstanding dues. But, if you are a frequent defaulter and have lot of dues than automatically your credit score will decrease which can result loan rejection. So, try to pay your dues on time or as early as possible.
  • Check Your Investments- In case you have pending dues which charges higher interest than your existing investment return, than it is suggested to pull of the required portion of amount and proceed to repay your loans; it would be more sensible decision. However, do not break any life insurance policy or emergency fund for debt payment.
There are various banks which provide personal loans with less interest rate such as SBI, PNB, ICICI and HDFC bank personal loans. Visit to your nearest bank for more information.
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