Are you sitting on a large credit card bill? Are you just paying the minimum amount of your credit card bill every month to avoid default? If both the questions are true then you are trapped in a debt cycle.

If you are not paying your credit card dues on time then you are probably paying up to 47% rate of interest on your debt. And it keeps on mounting with each bill cycle. One missed payment can multiply your credit debt to a larger amount.

Personal Loan

In case you are facing difficulty in clearing your credit card bill in full then you may consider taking a personal loan to clear the debt. In comparison to credit cards, a personal loan is normally charged at up to 15%. This will help you in saving a lot of money on interest.

If you have multiple credit card dues then managing the payment might become a task. In such cases, you can easily opt for a balance transfer. All your credit card dues will be consolidated and transferred to a cheaper personal loan. To make your EMIs more affordable, you can also increase the tenure of personal loan to up to 5 years.

And if your credit score is not good for a unsecured personal loan then you can go for secured top-up or gold loan.

Top-up Loan

If you have an existing home loan, you can avail a top-up loan over it at lesser interest rates. The interest rate on a top-up loan is normally equivalent to the home loan. Top-up loans on property are normally approved instantly after the required paperwork. It would be more easier to get a top-up loan if your existing home loan more than 2 years old and you have been paying the EMIs regularly without any default.

However, you will not be eligible for any tax benefit on your top-up loan.

Gold Loan

Depending upon the lender and your credit score, gold loans are normally available at 11% to 14% interest rate. With new RBI guidelines, you can avail up to 90% loan amount on your gold.

Small credit card debts can easily spiral into large amounts that you find difficult to repay due to high interest charges. In such scenarios, it is logical to take a loan on lower interest rates to pay credit card bills and save on interest charges.