Anyone who uses a Credit Card
regularly would swear by the convenience it offers. Credit Cards are like a
lifeline to most people. They allow you to buy anything you want with a mere
swipe of the card. But you also tend to become so dependent on it that you
cannot imagine life without one of them in your wallet. And therein lies the
danger! The danger of mounting Credit Card debt! Ask anyone who has faced this
problem, they will tell you that it is not a particularly pleasant situation to
be in. So how do you go about managing your Credit Card debt without letting it
get too big for your boots?
Personal
Loans for Paying Credit Card Debt
A Credit Card debt is
also a type of loan. But what makes it tougher to repay than other types of
loans is the rate of interest that it bears. Credit Card interest rates usually
range from about 25% to 35% per annum. In some cases, it even crosses the 40%
barrier! And the easiest way out of a sticky situation involving debt, in the
absence of other sources of funds, is to repay it by borrowing another loan
albeit at a lower rate of interest. This is where Personal Loans come into the
picture.
Borrowing a Personal Loan
has gained widespread acceptance as a convenient method for paying off Credit Card
debts. But has there ever been a solution (and a financial one at that!) which
works equally well for everyone? So before you join the bandwagon (or not),
take a moment to analyze the pros and cons of borrowing a Personal Loan to
offset your Credit Card dues.
The Pros
Lower
interest rate
The greatest advantage of
borrowing a Personal Loan is that you no longer have to pay exorbitant interest
rates that are associated with Credit Card debts. You could Apply for Personal Loans Online at an interest rate as low as 10.99% with online financial
service providers like mymoneymantra.com. The brand is one of India’s
premier online financial service providers and has a team of experts in its
ranks to provide you with optimum financial solutions.
Good
for your credit ratings
When you clear all your Credit
Card dues all at once, your credit score receives a significant boost. Follow
that up with timely EMI repayments for the Personal Loan and your credit score
would just skyrocket.
Allows
you to repay the debt once and for all
The fact that you do not
ever need to repay your Credit Card debt completely and only need to arrange
for a minimum payment on every due date often gets you trapped in the vicious
circle of ballooning debts. You never quite clear your dues and the burden of
debt always weighs on your shoulders. Borrowing a Personal Loan prevents such a
scenario from occurring. And even though the loan tenure may be up to 5 years,
you would probably still clear the loan quicker than you would otherwise have
cleared your card debt.
You
only have to manage a single credit line
A lot of cardholders use
more than one card. Managing the minimum payment amounts on different due dates
for different cards isn’t exactly a task that fills you up with excitement.
When you consolidate all your debt under a single umbrella, it becomes much
easier to manage and adhere to the repayment schedule as you only need to focus
on one credit line.
The Cons
Managing
the EMI payments
While the idea of
clearing card debts and managing a single credit line seems appealing, it may
turn complicated if you fail to manage the monthly repayments. If you neither
have a stream of income that could fund your EMIs (Equated Monthly Instalments)
nor an opportunity to develop one in the near future, borrowing a Personal Loan
is a really bad idea. When you default on an EMI payment, your credit ratings
take a serious hit. Take the plunge only if you are certain of your ability to
manage the payments.
You
may end up paying more interest in monetary terms
While the interest rate
would in all likelihood be lower for a Personal Loan than for a card debt, you
may actually end up paying more money as interest on a Personal Loan owing to
its long tenure. But this though is contingent on the fact that you have an
alternative arrangement to clear your card debts in the immediate future
because in the long run you would obviously pay more interest on a card debt
owing to the higher interest rate it bears.
Like it always is in
financial matters, the decision to borrow a Personal Loan for settling card
debts isn’t one that should be taken overnight. Give it a thought, analyse the
pros and cons of this solution and then see which side of the fence you would
prefer to be!
To apply online for
Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com,
the leading online lending marketplace that offers financial products from 60+
Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan
Specialists toll-free at 1800 103 4004 to know more about our products
and offers.
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