Credit card interest at 36-42% p.a. is 3-4x a personal loan's typical 12-15%. Even after accounting for a processing fee, converting outstanding credit card balance to a personal loan almost always saves money.
Worked examples
Meera — ₹1L debt: credit card vs personal loan for 2 years
Meera has ₹1L outstanding. Credit card at 36% p.a.: EMI ~₹5,800/month, total interest ₹39,200. Personal loan at 14% p.a.: EMI ~₹4,800/month, total interest ₹15,400. Meera saves ₹23,800 by converting. Plus the credit card minimum payment trap: if she pays only 5% minimum (~₹5,000) each month, it takes 28+ months at 36% interest.
Frequently asked questions
Should I pay off credit card with a personal loan?
Usually yes, if the personal loan rate is below your credit card's interest rate (36-42%). Even at 18%, the personal loan is cheaper. Savings depend on the balance size and timeline.
What is the interest-free period on credit cards?
Typically 20-50 days from the statement date. If you pay the full balance before the due date, no interest is charged. This is the only scenario where credit card beats any loan on cost.