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Want to Swap Your Credit Card Outstanding with a Personal Loan? Keep These Things in Mind

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.

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.

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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 Card30% to 40.2%
HDFC Bank23.88% to 41.88%
ICICI Bank29.88% to 42%
American Express42.00%
Axis Bank34.49% to 49.36%
Standard Chartered Bank37.20% 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

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  • Personal Loan Interest Rates July 2020
    Fullerton India14.00% - 33.00%
    HDFC Bank10.75% - 21.45%
    ICICI Bank10.75% - 18.49%
    IndusInd Bank11.25%
    Kotak Bank10.99% - 20.99%
    RBL17.50% - 24.00%
    Standard Chartered Bank12.00% - 17.00%
    Tata Capital10.99% - 18.00%