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The habit of reckless credit card shopping takes most into the revolving credit zone and puts them under the massive interest burden of somewhere around 30%-45% per annum. When the due amount becomes unbearable, one looks to switch the balance to the credit card of another bank. Yes, this deal gives you an interest-free period of 45-60 days. Afterward, if you keep revolving credit by paying the due partially, the outstanding will notch high. The best way to get rid of the credit card debt is via a personal loan as the latter can be availed at an interest rate of around 11%-18% p.a. But the script may not go the way you desire! Banks can reject the application to swap your credit card debt with a personal loan citing various reasons. So, what are those reasons? Let’s find out here.
Table of Contents
- 1 Rejection Fear Mounts If the Credit Card Outstanding is More than 4-5 Times of Your Income!
- 2 Swapping Virtually Impossible If the Repayment Track Shows a Series of Payment Skips
- 3 Multiple Applications Can Make It Even Tougher
- 4 Credit Card Interest Rates of Top Lenders (Applicable to Revolving Credit)
- 5 Benefits of Swapping Credit Card Debt with a Personal Loan
Rejection Fear Mounts If the Credit Card Outstanding is More than 4-5 Times of Your Income!
Most banks will deny swapping your credit card debt with a personal loan if the former is more than 4-5 times of your income. With income. it means take-home earnings. Only a few lenders will raise hands in such a situation. So, you need to ensure the outstanding remains within the prescribed limit by keeping a lid on unnecessary spends.
Swapping Virtually Impossible If the Repayment Track Shows a Series of Payment Skips
If you make injudicious spends with your credit card, there could be a time when you struggle to pay even the minimum due, which constitutes around 5% of the outstanding balance in a billing cycle. This could force you to skip the payment. If that happens frequently, your application to swap the credit card outstanding with a personal loan can be rejected by the lender.
Multiple Applications Can Make It Even Tougher
Call it ignorance or any other, you could apply for such a deal at various lenders hoping to get a nod from at least one. But with multiple applications, there will be multiple credit enquiries from lenders, reducing the credit score considerably. And, if the credit score was on a tricky ground before the applications, chances of rejection will only increase.
Credit Card Interest Rates of Top Lenders (Applicable to Revolving Credit)
|Top Banks||Interest Charges (In Per Annum)|
|SBI Card||30% to 40.2%|
|HDFC Bank||23.88% to 41.88%|
|ICICI Bank||29.88% to 42%|
|Axis Bank||34.49% to 49.36%|
|Standard Chartered Bank||37.20% to 41.88%|
Benefits of Swapping Credit Card Debt with a Personal Loan
- The repayment becomes easy with lower rates of personal loans. Not only the monthly obligations (EMI) come down but also the interest over the loan tenure
- The ease in repayment will help you pay on time and boost your credit score, making you eligible for future credits
- With lesser debt obligations, you’ll get the window to spend a little extra
- You can repay the loan in flexible tenures ranging from 12-60 months