With spending power that comes with credit cards, it is easy to be trapped in the vicious cycle of debt if one is not cautious. The situation becomes dire when the debt is spread over multiple cards. The situation can be tackled easily through personal loans. These unsecured loans have minimal documentation and no collateral can be used to mitigate immediate financial crunches at feasible interest rates.
Let’s delve further into personal loans and how they can be used to pay off credit card bills.
Personal loans: A glance
With minimal personal loan documents and no collateral submission, personal loans are the most accessible credit options for all regardless of self-employed or salaried applicants. Being unsecured, lenders use stringent criteria for loan qualification. Most lenders rely on the credit scores by CIBIL to determine the eligibility of the applicant. Applicants should note that the eligibility criteria vary from lender to lender. Applicants can verify their eligibility using a personal loan eligibility calculator.
Surmised below are the eligibility criteria for Fullerton India.
|Credit score||750 or above||750 or above|
|Age limits||21-60||21- 60|
|ITR||Required while submitting documents||Applicants should have income tax returns filed for the past 2 or 3 years.|
|Income||A minimum monthly income of Rs 25,000 for applicants from Delhi or Mumbai and Rs 20,000 for other applicants.||A minimum profitable income after-tax which should be a viable amount in the respective industry|
|Work Experience||One year||One year|
How do personal loans help to tackle the overdue of a credit card?
Although a higher spending one can earn points on a credit card, a defaulted repayment can negatively affect the credit score. Especially if you possess multiple cards and the balance is split across, it would be advisable to pay off the due as soon as possible to avoid hefty charges.
The most prominent method to handle credit overdue is by applying for a personal loan. With booming digitization, most lenders provide a personal loan online apply option through their websites or applications, making the process hassle-free.
Let’s check out the benefits of opting a personal loan:
- Lower interest rates
The interest rates on an outstanding due of a credit card multiplies with each day of delayed payment and is much higher than personal loan interest rates. By adopting personal loans with lower interest rates, you can save your funds from exhausting. One of the easiest ways to compare this fact is using the annual percentage rate of the two choices. A choice with a lower annual percentage rate helps you save better.
- Consolidating the overdue
If you are a holder of multiple cards, with dues spread across, the best way to combine the debt is to opt for personal loans. With just one monthly repayment at lower interest rates, one can handle their finances better.
Personal loans are a popular credit tool among the masses because of the flexibility it offers. It allows the applicant to choose their tenure based on their financial capacity to repay the EMIs. Such flexibility is not available with credit cards.
- Enhancing credit score
Credit card dues can reduce the credit score of the cardholder. By opting a flexible personal loan option, one can not only pay their dues but also improve their credit scores.
Personal loans are often saviours, especially when one drifts in a rough tide of dues. By choosing the right lenders with best interest rates, one can not only pay off their dues but also improve their credit scores.