Debt Consolidation

Best personal loan for credit card debt: what decides it

The useful thing a personal loan does to credit card debt is not lower the rate. It is give the debt an end date. A card balance has none: the minimum-due schedule is built so that a balance you never add to still takes over a decade to disappear, and most people add to it. A loan at 16 percent replacing a card at 42 percent looks like a rate story. It is a calendar story.

That changes which question comes first. Before 'which personal loan is best for card debt' there is a prior one: will you clear the card in the next three months anyway, from a bonus, a maturity or a sale? If yes, the loan's processing fee and foreclosure charge are its whole cost, and the loan usually loses. If no, almost any personal loan beats the card, and choosing between loans is about the fee, the tenure and the prepayment terms, not the headline rate.

This page prices both branches on a ₹1.5 lakh balance, at illustrative rates you can swap for your own, so you can see which branch you are on before you compare a single offer.

Last reviewed 2026-09-24

How a card balance actually charges you

The technique

A card's rate is monthly, and the minimum due is built to keep it running

Cards quote interest as a monthly rate, commonly around 3.5 percent, and the mind reads it as if it were annual. It is not. It is about 42 percent a year before GST, it accrues daily on the unpaid balance from each transaction date once you carry anything past the due date, and the minimum due is set just high enough to keep the account current and just low enough that the principal barely moves.

Take ₹1,50,000 outstanding at an illustrative 3.5 percent a month. One month's interest is ₹5,250. GST at 18 percent applies to the interest, which adds ₹945, so carrying the balance for a month costs ₹6,195, or roughly ₹207 a day. Nothing on that statement reduces the debt; it is the price of standing still.

Now the minimum-due schedule. Issuer formulas vary, so this is a model: assume the minimum due each month is 5 percent of the balance plus that month's interest plus GST on the interest, and that you pay exactly that and never spend on the card again.

Month	You pay	Of which interest + GST	Balance after
1	₹13,695	₹6,195	₹1,42,500
3	₹12,360	₹5,591	₹1,28,606
12	₹7,790	₹3,524	₹81,054
24	₹4,209	₹1,904	₹43,798
60	₹664	₹300	₹6,910
143	₹9	₹4	₹98

Model only: 5% of balance + interest at 3.5%/month + 18% GST on interest, no new spending. Real minimum-due formulas differ by issuer; see the card's MITC. Balance falls below ₹100 in month 143.

Paying the minimum on ₹1.5 lakh takes about 143 months, nearly twelve years, and costs ₹1,23,819 in interest and GST on the way: total outgo ₹2,73,721 to clear ₹1,50,000
The first year alone charges ₹56,949 in interest and GST while clearing ₹68,946 of principal. Almost half of what you pay in year one buys you nothing
The schedule assumes you stop using the card. A card carrying a balance has no interest-free period on new spends, so every purchase joins the balance at the full rate from its transaction date

What a fixed end date is worth in rupees

Suppose instead you commit to clearing the card with equal monthly payments, still at the card's rate. That is what a fixed end date costs on the card itself, and it is the fair comparison for a personal loan, which forces the same discipline at a lower rate.

Clear ₹1.5 lakh in	On the card at 42% + GST	Loan at 12%	Loan at 16%	Loan at 22%
12 months	₹15,523/month, cost ₹42,800	—	—	—
24 months	₹9,341/month, cost ₹87,535	₹7,061/month, ₹19,465	₹7,344/month, ₹26,267	₹7,782/month, ₹36,761
36 months	₹7,393/month, cost ₹1,37,039	₹4,982/month, ₹29,357	₹5,274/month, ₹39,848	₹5,729/month, ₹56,228

Reducing-balance EMI. Card at an illustrative 3.5% per month with 18% GST on interest; loan rates illustrative, before processing fee. 'Cost' is total interest, plus GST where it applies.

Over 24 months, the card's own EMI is ₹9,341 against ₹7,344 for a 16 percent loan. The monthly gap is ₹1,996; the total gap is ₹61,268, because ₹87,535 of the card's outgo is interest and GST against ₹26,267 on the loan
Even a loan at 22 percent, which is a poor personal loan rate, costs ₹36,761 over 24 months against the card's ₹87,535. The rate you get matters far less than whether you get off the card at all
The 36-month card row is the one to fear: ₹7,393 a month feels affordable and costs ₹1,37,039, close to the original balance again

The question before the loan question

The technique

Will the balance be gone in three months anyway?

If money is coming, from a bonus, an FD maturity or a sale, the loan is not replacing 24 months of card interest. It is replacing one to three months of it, and against that its fee and foreclosure charge are the whole cost. The honest comparison is to the card's cost over the months you would actually carry it, not to its annual rate.

Here is ₹1.5 lakh carried in full until a lump sum arrives: the card against a 16 percent, 24-month loan with a 2 percent fee (₹3,540 with GST), foreclosed the month the money lands. Many fixed-rate personal loans carry a foreclosure charge and a lock-in of several EMIs; the table prices the charge at an illustrative 4 percent plus GST of the outstanding, and separately at zero.

Lump sum arrives in	Card interest + GST	Loan: fee + interest	Loan incl. 4% foreclosure
1 month	₹6,195	₹5,540	₹12,368
2 months	₹12,390	₹7,469	₹14,041
3 months	₹18,585	₹9,325	₹15,638
4 months	₹24,780	₹11,109	₹17,160

Loan interest on a reducing balance at an illustrative 16%. Foreclosure charge applied to the balance outstanding at that month (₹1,44,656 after month 1, ₹1,33,752 after month 3). Card at 3.5%/month + 18% GST on interest, balance unchanged until the lump sum.

With no foreclosure charge, the loan wins even at one month, by ₹655, and over three months the fee would have to reach about 7.2 percent of principal (₹10,847 with GST) before the card won. A 3 or 4 percent fee still loses to the card's ₹18,585
With a foreclosure charge, the picture flips: at one month the loan costs ₹12,368 against the card's ₹6,195, at two months ₹14,041 against ₹12,390. The loan pulls ahead only around month three, and a lock-in may stop you foreclosing that early at all
If you will pay the card down in chunks rather than one lump sum, the card is cheaper again: ₹50,000 a month for three months costs ₹12,390, not ₹18,585, because the balance the interest runs on is shrinking

What actually separates two loan offers

Once you are on the 'not clearing it soon' branch, every offer in the 12 to 22 percent band beats the card by ₹47,000 or more over 24 months, even after a 2 percent fee (₹87,535 on the card against ₹36,761 plus ₹3,540 at 22 percent). Two offers two points apart differ by ₹3,421 in interest at 14 versus 16 percent over 24 months. The things that move the cost by more than that are not the rate.

₹1.5 lakh loan at 16% over 24 months, what each term is worth

Processing fee 2% + GST, deducted before disbursal: ₹3,540
Same loan with a 4% fee: ₹7,080
Effective annual rate after the 2% fee, on the ₹1,46,460 you actually receive: 18.46%
Choosing 36 months instead of 24 at the same rate: extra interest: ₹13,581
Foreclosing after month 3 with a 4% + GST charge: ₹6,313

Reducing-balance EMI at an illustrative 16%. Fee and foreclosure percentages are illustrative; the sanction letter states the real ones.

Fee, including GST, in rupees. A 2 percent fee turns 16 percent into an effective 18.46 percent over two years, and a 4 percent fee is worth more than two points of rate. Ask for the net disbursal, not the fee percentage
Tenure. 36 months at 16 percent costs ₹39,848 against ₹26,267 at 24 months, for an EMI ₹2,070 lower. Take the shortest tenure whose EMI you can carry without the card coming back out
Prepayment terms: the lock-in, the part-prepayment minimum and the foreclosure charge decide what a bonus next year is worth to you. A loan with no foreclosure charge and a rate one point higher can be the cheaper loan
Whether the lender pays the card issuer directly. A plain personal loan credits your account and trusts you to pay the card the same day; the direct route removes the week in which the money sits next to a card with a freshly empty limit

When the loan is the wrong answer

The arithmetic above says the loan wins in most cases. These are the cases where it does not, and the third is the one that turns a good decision into a worse debt.

The balance is going anyway. If the money arrives within a month or two and the loan has a foreclosure charge or lock-in, you pay ₹12,000 to ₹14,000 to avoid ₹6,000 to ₹12,000. Pay the card down as the money comes
The loan is bigger than the balance. A ₹1.5 lakh card balance does not need a ₹3 lakh loan because the lender offered one. The extra ₹1.5 lakh is new debt at the loan's rate, arriving disguised as a solution
The card comes back out. This is the behavioural risk, and the common failure: the loan clears the card, the limit is free again, and within a year there is a ₹7,344 EMI and a new card balance on top. Nothing about the loan prevents it. If you do not trust the next twelve months, lower the card's limit the day the balance hits zero, or close it
You cannot carry the EMI. A 24-month loan at 16 percent needs ₹7,344 a month, close to the notional ₹7,500 (5 percent) lenders already assume on a ₹1.5 lakh card balance, so it rarely worsens FOIR. But if ₹7,344 is not there every month, the 36-month EMI of ₹5,274 costs ₹13,581 more and is still better than missing an EMI

What to check before you sign

A short ledger, in the order that matters. Every line can be read off the card's MITC and the loan's sanction letter or key fact statement.

The card's current monthly cost: last statement's interest charge plus the GST line. That is the number every loan has to beat, not the annual rate. On ₹1.5 lakh at 3.5 percent it is ₹6,195
Your honest horizon: will the balance be gone in three months without the loan? If yes, and the loan has a lock-in or foreclosure charge, stop here
Net disbursal in rupees, after fee and GST, and the effective rate on that amount. A 2 percent fee on ₹1.5 lakh is ₹3,540 and makes 16 percent into 18.46 percent over 24 months
Tenure and total interest side by side: 24 months ₹26,267, 36 months ₹39,848 at 16 percent. Pick by total, then check the EMI fits, not the other way round
Lock-in months, part-prepayment minimum, foreclosure charge as a percentage of outstanding. Read the actual clause
Timing of the card payment: interest accrues daily until the issuer receives the money, so pay the card the day the loan lands, including interest accrued since the statement date, or a residual keeps charging at 3.5 percent
What happens to the card limit after zero: reduce it, keep it for interest-free use with the full amount paid each month, or close it. Decide before the loan, not after the first new purchase

Common questions

Is a personal loan to pay off credit card debt actually cheaper?

Almost always, if you would otherwise carry the balance for more than about three months. A ₹1.5 lakh card balance cleared in equal payments over 24 months at an illustrative 3.5 percent a month costs ₹87,535 in interest and GST. The same balance on a 24-month personal loan at an illustrative 16 percent costs ₹26,267 in interest plus a ₹3,540 processing fee. Even at 22 percent the loan costs ₹36,761. The loan loses only when the balance is about to be cleared anyway.

Why does paying the minimum due never seem to clear the card?

Because the minimum is designed that way. In a model where the minimum is 5 percent of the balance plus that month's interest at 3.5 percent plus 18 percent GST on the interest, a ₹1.5 lakh balance with no new spending takes about 143 months to fall below ₹100 and costs ₹1,23,819 in interest and GST. Each payment shrinks with the balance, so the account stays current while the principal barely moves. Real issuer formulas differ, but the shape is the same.

Does the headline rate on the loan matter much?

Less than the fee, the tenure and the prepayment terms. Over 24 months on ₹1.5 lakh, 14 percent versus 16 percent is ₹22,846 versus ₹26,267 in interest, a gap of ₹3,421. A 4 percent processing fee instead of 2 percent is a gap of ₹3,540 on its own, and choosing 36 months over 24 at 16 percent adds ₹13,581. Any rate in the 12 to 22 percent band beats the card by ₹47,000 or more over two years even after a 2 percent fee; compare offers on net disbursal, total interest and foreclosure terms.

Should I take the loan if I will get a bonus in two months?

Usually not. Carrying ₹1.5 lakh on a card for two months at 3.5 percent a month costs ₹12,390 in interest and GST. A 16 percent loan with a 2 percent fee costs ₹7,469 in fee and interest over the same two months, but if it carries a foreclosure charge of 4 percent plus GST on the outstanding balance, the total is ₹14,041, and a lock-in may stop you foreclosing at all that early. Pay the card down as the money arrives, and revisit the loan only if the bonus does not.

Will a personal loan for card debt hurt my credit score or FOIR?

On FOIR it is roughly neutral. Lenders typically treat a card balance as a notional obligation of around 5 percent of the outstanding, ₹7,500 on ₹1.5 lakh, and a 24-month loan at 16 percent needs an EMI of ₹7,344, so the loan replaces one obligation with a similar one that now ends. The application adds a hard enquiry; card utilisation falling to near zero is generally read favourably afterwards. What damages both is the common sequel: the card refilling on top of the EMI.

The best personal loan for credit card debt is the one you do not take if the balance is going anyway, and otherwise the one with the lowest fee, the shortest tenure you can carry, and terms that let you prepay when money arrives. On ₹1.5 lakh, the difference between two loan rates is a few thousand rupees over two years; the difference between any loan and the card's minimum-due schedule is ₹1,23,819 and about twelve years. The loan is not a cheaper rate. It is an end date. Informational page, not financial advice. Card interest rates, minimum-due formulas, loan rates, fees, lock-ins and foreclosure charges differ by issuer, lender and applicant and are set at their discretion — your card's MITC and your sanction letter govern, not this page.

Debt Consolidation

Personal Loan vs Credit Card: Consolidate Your Debts

Use a low interest personal loan to pay off high-interest credit card debt. Compare personal loan vs credit card interest rates and save up to 70% on interest payments.

The Credit Card Trap

Why minimum payments keep you stuck

Credit Card Interest Rate36-48% p.a.

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