Archive · 20 Aug 2026
Using Personal Loans to Pay Credit Card Debt
A personal loan can be used to pay off a credit card bill.
The new loan replaces the old card debt, but the debt does not disappear.
This may save money if the personal loan has a much lower interest rate.
The borrower then repays the new loan in fixed monthly payments.
Fees can make the switch less useful, so the total cost must be checked.
A longer loan may have smaller monthly payments but more interest overall.
Spending heavily on the credit card again could create two debts instead of one.
Self-employed people should use a personal loan for personal bills rather than using a business loan.
A personal loan can be deposited into a bank account and used to fully pay a credit card balance.
The strategy may reduce interest when the personal-loan rate is substantially below the card’s 30%–48% annualised rate.
Loan fees, repayment terms and the risk of rebuilding card debt can eliminate the financial benefit.
A fixed personal-loan tenure creates scheduled EMI payments instead of indefinite minimum credit-card payments.
Self-employed borrowers should use a personal loan for personal debt, not a business loan intended for business expenses.
- Who
- Credit card borrowers, including salaried and self-employed applicants.
- What
- Using an unrestricted personal loan to pay a credit card’s outstanding balance and then repay the loan through EMIs.
- When
- When the personal-loan interest rate and fees produce a lower total cost than continuing the credit-card debt.
- Where
- The personal loan is disbursed to the borrower’s bank account, and the card bill can be paid through UPI, netbanking or the issuer’s app.
- Why
- To potentially reduce interest costs, create a fixed repayment schedule and lower credit-card utilisation.
Potential Benefits
Key Risks And Costs
Interest expense
Potential Benefits
Replacing credit-card debt charged at a high rate with a meaningfully cheaper personal loan may reduce total interest.
Key Risks And Costs
Fees and a personal-loan rate that is only slightly lower than the card rate may erase the savings.
Repayment structure
Potential Benefits
A fixed tenure and EMI schedule gives borrowers a defined date for clearing the debt.
Key Risks And Costs
Extending the loan over a longer tenure can increase total interest even while lowering the monthly EMI.
Debt management
Potential Benefits
Paying the card balance in full can reduce credit utilisation and may improve the borrower’s CIBIL Score.
Key Risks And Costs
If the borrower uses the cards again after paying them off, they may end up with both the personal loan and new credit-card debt.
- Typical credit-card interest
- About 2.5%–4% per month, or 30%–48% annualised, according to the article.
- Personal-loan rates
- The article gives a range of 10.5%–36% annually and cites 11.99% as a starting rate for eligible Stashfin borrowers.
- Illustrative savings
- A ₹2,00,000 balance held for two years at 42% versus 18% is described as producing roughly ₹96,000 in avoided interest.
- Repayment structure
- Personal-loan tenures mentioned include 12, 24, 36 and 60 months.
- Credit utilisation
- The article says utilisation above 30% can reduce a CIBIL Score and that paying down the balance may lift it by 20–50 points within two billing cycles.
- Self-employed documentation
- Applicants may need two to three years of ITRs, GST registration where applicable, and six to 12 months of business bank statements.
- Example loan offer
- The article says Stashfin offers up to ₹5,00,000, with 0% interest for the first 30 days and no foreclosure charges, subject to disclosed fees and applicable terms.