Why not replace Credit card with Personal loan?

Posted by trishyasharma on November 5th, 2019

With credit cards one can become too comfortable making minimum payments on their credit card bills. This is largely due to the thought process minimum payments is enough to prevent late fees and interest charges. However, one ends up paying hefty fees for the outstanding not paid and overall one ends paying higher interest rate as compared to other source of credit.

So what is bets one can do? Swap the credit card debt with personal loan debt. So, one can consider a debt consolidation loan or  credit card takeover loan to make these changes.

 

How Does Credit Card Takeover Help?

Lower Interest Rates

Debt consolidation loan is a personal loan (1.5-3% per month) and has lower interest rate in comparison to the interest rates on credit cards (3-5% per month). Hence, there’s indirect saving that one would otherwise pay in the form of higher interest. 

Convenience:

Credit card takeover loan is usually interest only payment and hence helps one lower monthly outflow up to 40%. With it, you don’t have to worry about paying the principal amount as you are free to wait until you are ready. When you are in a better financial position, you can finally pay off the principal amount.

CIBIL Score Protection:

One of the most important advantages of using debt consolidation loan is that u=it saves your Credit bureau score, CIBIL or Crif. Delayed credit card payments can often have a negative impact on your CIBIL score, which you simply can’t afford. With a poor CIBIL score your chances of loan approvals become low and making the necessary repairs could take a lot of time and energy.

No Late Fees and Penalties:

With a credit card takeover loan,  you can also avoid late fees and penalties. Since the loan can be obtained within a matter of days, you can save a lot of money on late fines and penalties, which are generally quite high.

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