Paying Off Credit Card Debt

Personal loans from the same bank run from 9.99% to 24.00% on the rates we track as of 15 August 2026. Even the worst end of that range is roughly half the card rate. That single comparison is the whole strategy.

Why is credit card interest so much higher than it looks?

Because it is quoted per month. Three point seven five per cent sounds survivable. Multiply by twelve and it is 45%, and the issuer’s own document says so.

Then two mechanics make it worse than the rate suggests.

The interest-free period vanishes. The published terms give 20 to 50 days interest free, but state that it does not apply if the previous month’s balance was not cleared in full, or if you took cash from an ATM. So the moment you revolve, every new purchase starts accruing interest from its transaction date.

And the fees stack on. Late payment charges are set by the size of your statement balance, not by what you missed. On the same published schedule, a balance above ₹50,000 attracts ₹1,300, plus 18% GST. GST applies to the interest too.

Our credit card interest calculator shows what a balance costs over a year, and credit card fees and charges has the full schedule.

The routes out, cheapest first

Read that table top down. Most people start at the bottom because it feels easier, and it is the most expensive order possible.

Which balance do I pay off first?

The one with the highest interest rate. Every time.

That method is often called the avalanche. Pay the minimum on everything, then throw every spare rupee at the highest-rate balance until it is gone, then move to the next. It costs less than any other order, arithmetically, with no exceptions.

The alternative is the snowball: clear the smallest balance first for the psychological win. It costs more. It also works for some people who would otherwise give up, and a plan you finish beats a cheaper plan you abandon.

If you have two or three cards and reasonable discipline, use the avalanche. Our debt payoff calculator compares the two on your own numbers.

Why paying the minimum keeps you stuck

The minimum amount due is designed to keep the account current. It is not designed to clear the debt, and on a large balance it barely touches the principal.

Worse, paying it does not restore your grace period. You are still revolving, so new spending on that card starts accruing interest immediately. People pay the minimum, keep using the card, and cannot understand why the balance never falls.

The first move is not a payment plan. It is to stop using the card. Take it out of your wallet and out of every saved checkout. Read minimum amount due for what that number is actually built from.

Consolidation: useful, and easy to get wrong

Replacing card debt with a personal loan works because the rate falls and the repayment has an end date. A card balance has no end date, which is the real problem with it.

Watch three things. The processing fee is deducted upfront, so you receive less than you borrow while paying interest on the full sanctioned amount. The rate you are offered depends on your credit score band, and card debt has probably already dented it. And the tenure matters: stretching a ₹3,00,000 balance over six years lowers the EMI and raises the total interest.

The failure mode is not financial, it is behavioural. The loan clears the card, the card now has a full available limit, and within a year there are two debts instead of one. Close the card or cut the limit on the day the loan lands.

See debt consolidation loans and the credit score needed for a personal loan before applying.

Do not settle unless you have run out of options

This is the uncomfortable part, and the industry is quiet about it.

A settlement is not a closure. You pay less than you owe, the issuer writes off the rest, and the account is reported as settled rather than closed. That marker sits on your credit record for years and it is read by every future lender as a default you negotiated.

The practical effect is that the cheap borrowing routes close. Home loans, personal loans at reasonable rates, sometimes even a basic credit card. You saved money once and paid for it repeatedly.

If you are already there, get the terms in writing and insist the account is reported as closed rather than settled where the issuer agrees to it. Our loan settlement versus closure page explains the difference, and credit score after settlement covers the recovery.

If a recovery agent is calling outside permitted hours or contacting your family, that is a separate matter with its own remedy. See recovery agent harassment.