Are your credit card bills piling up? Are you struggling to keep up with payments? You are not alone. Many people face the same challenge, like high interest rates, late fees, and endless statements that never seem to shrink. That’s when leveraging a personal loan to pay off credit card debt can come in handy.

But before jumping in, take a moment to look at your finances. Ask yourself:

• Are you only managing to pay the minimum amount on your credit cards?
• Do you have multiple cards with different interest rates?
• Are you paying more interest than actually reducing your debt?
• Is your credit card debt affecting your credit score or peace of mind?

If you nodded “yes” to any of these, then getting a loan to repay credit card debt could be worth considering. Let’s break it down in simple terms.

What Is a Personal Loan for Debt Consolidation?

Personal loan for debt consolidation lets you combine all your existing debts, such as multiple credit cards or smaller loans, into a single loan with one fixed EMI.

Think of it like tidying up a cluttered room. Instead of keeping track of several bills with varying due dates and rates, you just have one clean, manageable payment.

With this approach, you can often lower your total interest rate and make repayment more predictable.

Understanding Credit Card Debt

Credit cards make spending easy, sometimes too easy. But when you carry an unpaid balance month after month, interest starts to build up fast. In India, most credit cards charge anywhere between 30% to 45% per annum. This kind of interest rate can turn a small purchase into a big problem if left unpaid.

How much of your credit limit you’ve used can also affect your credit score. Thus, Financial experts recommend keeping your credit utilisation ratio high. So, when interest piles up and your utilisation shoots above 50%, it’s time to look for a smarter repayment option, like personal loans.

Why Consider Using a Personal Loan to Pay Off Credit Card Debt?

Getting a loan to repay credit card debt might sound counterintuitive at first, but it can actually be a smart move when done right. Here’s why:

• Lower Interest Rates: Personal loans often have lower rates compared to credit cards, helping you save on interest.
• Fixed EMIs: You know exactly how much to pay every month. That makes budgeting easier.
• Credit Score Boost: Paying off credit cards can lower your credit utilisation, which can improve your credit score.
• One Single Payment: Instead of managing multiple cards and due dates, you handle just one EMI.

Imagine this: you are juggling three credit cards, each with different due dates and interest rates. By consolidating them into one personal loan, you clear the clutter and regain control.

How to Pay Off Credit Card Debt With a Personal Loan

Follow these simple steps:

Step 1: Calculate Your Total Credit Card Debt

Start by listing down all your outstanding balances, along with the interest rate on each card. This helps you know the exact amount you need to borrow.

Step 2: Check Personal Loan Eligibility and Offers

Before applying, review your eligibility, credit score, and interest rate offers. A higher credit score often means better terms. You can check what a good score looks like here.

Step 3: Compare Loan Options and Apply

Don’t just take the first offer you see. Compare interest rates, processing fees, and repayment terms from different lenders before finalising the personal loan to pay credit card debt.

Step 4: Create a Repayment Plan

Once approved, use the loan amount to pay off all your credit cards. Then focus on repaying the personal loan through timely EMIs. Automating payments can help you stay on track.

How to Take a Freo Personal Loan to Pay Off Credit Card Debt

If your credit card debt is starting to feel overwhelming, Freo can help you take control. You can apply for a personal loan through the Freo app and use it to clear your card dues. Here’s how you can get started:

1. See If You’re Eligible

   Before anything else, check if you qualify. You’ll need to:

   • Be either salaried or self-employed
   • Be between 21 and 60 years old
   • Have a monthly income of ₹20,000 or more
   • Have at least 3 years of work experience
   • Maintain a credit score of 650 or higher

   If you tick all the boxes, you’re good to go.

2. Gather the Documents You’ll Need

   Keep the following things ready before you begin:

   • PAN Card Number
   • A Professional Selfie, taken directly on the Freo app
   • Address Proof (any one of these): Driving Licence, Passport, or Aadhaar Card
   • ID Proof (any one of these): Driving Licence, Passport, Voter ID, Aadhaar Card, or PAN Card

   These documents help Freo verify your identity and process your loan smoothly.

3. Apply in 3 Simple Steps

   Once you have everything ready, follow these quick steps:

   • Download the Freo App from the Play Store or App Store
   • Fill in your details as guided in the app. 
   • Wait for approval which usually takes a few minutes.

   That’s it. It’s fast, simple, and completely digital. Once approved, the loan amount is credited to your account and you can use it right away to pay off your credit card bills.

Advantages of Using a Personal Loan to Repay Credit Card Debt

Here’s why it is a good idea:

• Reduced Interest Burden: You likely pay much less in interest compared to what you’d owe on multiple credit cards.
• Simplified Finances: You need to focus only on one fixed EMI instead of several confusing bills.
• Improved Credit Health: Clearing high-interest debts may boost your credit score over time.
• Faster Debt Clearance: Fixed tenure ensures your debt doesn’t drag on indefinitely.

Disadvantages to Keep in Mind While Using

While personal loans to pay off credit card debt can help, they are not a magic fix. Here’s what to watch for:

• New Debt Temptation: If you keep using your credit cards after clearing them, debt can pile up again.
• Processing Fees: Some lenders may charge extra fees or prepayment penalties.
• Long Tenures: A lower EMI over a longer term might cost you more in total interest.

Mistakes to Avoid When Using a Personal Loan to Pay Off Credit Card Debt

Avoiding little errors now can save you a lot of headaches later. Here are some things to be aware of:

• Keeping up Credit Card Use: By now, you must know that this thing is not meant for you. So, don't continue swiping your cards needlessly after they've been cleared.
• Selecting an Excessively Long Tenure: Although shorter terms might appear difficult, they ultimately save interest.
• Ignoring the Fine Print: Verify processing fees, prepayment guidelines, and penalties at all times.
• Spending the Whole Loan Amount Somewhere Else: Ensure that every rupee is used to settle your card debt.

Using a loan to repay credit card debt can be a smart move if done carefully. Compare offers, make a repayment plan, and avoid falling back into the same habits.

If you are exploring smart ways to manage debt, Freo Money can help you find the right personal loan to simplify your payments and get you closer to financial freedom. Remember, the goal is not just to clear debt, but to take control of your financial future.

FAQs

1. Are personal loans good to pay off credit card debt?

   Yes, if the personal loan offers a lower interest rate and manageable EMIs, it can help you clear your card dues faster.

2. What type of loan is used to pay off credit card debt?

   A personal loan for debt consolidation is commonly used to merge multiple card balances into one single loan.

3. How can I convert credit card debt into a personal loan?

   You can apply for a personal loan from your bank or lending app, use the funds to pay off credit cards, and then repay the loan in EMIs.

4. Does applying for multiple personal loans affect my credit score?

   Yes, too many loan applications can temporarily lower your score. Apply only when you are confident of approval.

5. Can I use a personal loan to pay off multiple credit cards?

   Absolutely. That’s one of the main benefits of a personal loan to pay credit card debt.

6. Should I close my credit cards after paying them off with a personal loan?

   Not necessarily. Keeping them open (and unused) can actually help maintain your credit score. Just use them wisely.