The maths is straightforward: if you are carrying credit card balances at 42% a year, replacing them with a personal loan at 13% cuts the cost by two thirds. The discipline is harder — consolidation only works if the cards stay unused afterwards. Otherwise you end up servicing both.
Before you borrow
- Compare the total payable, not the EMI — a longer tenure always looks cheaper monthly and costs more overall
- Check the processing fee, typically 1% to 3%, which is deducted before the money reaches you
- Ask whether prepayment is allowed and what it costs, since most personal loans are fixed rate
Run your numbers in the EMI calculator before you commit to anything.