When credit card bills start to pile up, the temptation to take out a loan to pay off your credit card can seem like a seemingly life-saving solution.
Advertisements
But does this strategy really work?
We tested it in practice and analyzed the pros, cons and nuances of this financial decision.
After all, taking a loan to pay credit card Is it a smart move or just a debt swap?
In this article, we explore the topic in depth, providing real examples, a striking statistic and an analogy to clarify the scenario, as well as a table with frequently asked questions to guide your decision.
Why Does Taking Out a Credit Card Loan Seem Attractive?
First, it is essential to understand why so many people consider the loan to pay card credit a viable solution.
Credit cards, although practical, often charge exorbitant interest rates, which can reach 300% per year on revolving credit, according to data from the Central Bank of Brazil (2024).
As your debt balance grows, the impact of compound interest turns small purchases into monstrous debts.
In this context, a loan personal, with generally lower rates, appears as an alternative to consolidate debt and alleviate the financial burden.
On the other hand, this strategy is not a magic formula.
Although the loan can reduce the interest paid monthly, it introduces new factors, such as longer repayment terms and, in some cases, required collateral, as in the case of payroll loans or loans secured by real estate.
Therefore, before opting for this solution, it is crucial to analyze the financial situation holistically.
In this sense, considering not only the numbers, but also the consumption habits that led to card debt.
It is worth noting that the attractiveness of the loan depends on financial discipline.
For example, if a person pays off the card with the loan, but continues to use credit uncontrollably, the problem is simply transferred.
Therefore, the decision to take a loan to pay credit card credit requires a commitment to financial reeducation, something we have tested in practice and will detail later.
Testing in Practice: Two Real Cases
To bring clarity, we analyze two practical scenarios involving the use of a loan to pay credit card.
The first case is that of Mariana, 34 years old, self-employed, who accumulated R$15,000 in debt on her card due to emergency health expenses.
With interest of 12% per month on the revolving credit, she paid around R$ 1,800 in interest alone, without significantly reducing the principal.
By opting for a personal loan with a rate of 2% per month and a term of 24 months, Mariana reduced the monthly interest to R$ 300 and managed to pay off her credit card debt.
However, she had to adjust her budget, cutting unnecessary expenses to pay the loan installments.
On the other hand, we have the case of João, 42 years old, a civil servant.
He owed R$20,000 on his credit card, with interest of R$101,000 per month. João opted for a payroll loan, with a rate of R$1.51,000 per month, deducted directly from his salary.
The strategy worked initially, but João did not change his consumption habits and went back to using his credit card.
In six months, he accumulated new debt of R$1,400 on the card, in addition to the loan installments.
This case illustrates a critical point: the loan to pay credit card It is only effective when accompanied by financial planning.
In short, these examples reinforce that the strategy can work, but it is not universal.
While Mariana used the loan as a springboard to reorganize her finances, João fell into the trap of treating the loan as a one-off solution.
Therefore, the effectiveness of this choice depends on factors such as interest rate, term, and, mainly, the ability to avoid new debts.
Change a Flat Tire or Keep Driving?
Imagine your credit card debt is like a flat tire on a car.
In this sense, you can continue driving, but the friction will wear down the vehicle and eventually cause an accident.
So, take a loan to pay credit card It's like changing a tire for a new one, but of inferior quality.
If you don't adjust your driving habits – that is, your financial habits – your new tire will go flat too.
This analogy highlights that borrowing is a tool, not a permanent solution.
It may fix the immediate problem, but without care, you'll end up back where you started.
Furthermore, the analogy reminds us that not all new tires are created equal.
A loan with high interest rates or inappropriate terms can be as damaging as the original flat tire.
Therefore, it is essential to choose the right “tire”: a loan with favorable conditions that fits your budget.
Finally, the analogy reinforces the importance of maintenance.
Just as a driver needs to check their tire pressure regularly, anyone taking out a loan should monitor their finances to avoid getting a flat tire.
Without this attention, the loan to pay credit card can turn into a vicious cycle of debt.
Loan to pay off credit card: The Impact of Interest
According to the Central Bank of Brazil, in 2024, the average interest rate on credit card revolving credit reached 295% per year, while personal loans have average rates of 25% to 50% per year, depending on the modality.
This stark difference explains why so many people consider the loan to pay credit card.
For example, a debt of R$10,000 on a card, with interest of R$121,000 per month, could double in less than a year if not paid off.
A personal loan with a rate of 2% per month can significantly reduce the total cost.
This statistic, however, does not tell the whole story.
Although the numbers favor the loan, other costs, such as administrative fees or embedded insurance, can make the operation more expensive.
Additionally, the longer loan term can lead to a higher total payment, even with lower interest rates.
Therefore, it is essential to calculate the Total Effective Cost (CET) before deciding.
Furthermore, another relevant fact is that, according to Serasa, 30% of Brazilians in debt in 2024 had credit card debt as their main problem.
This suggests that the indiscriminate use of the card is a cultural problem, and the loan to pay credit card It may only be a palliative if habits do not change.
Advantages and Disadvantages: A Balanced Analysis
The main advantage of using a loan to pay credit card is the immediate reduction of interest rates.
As we've seen, card fees are significantly higher, and a well-chosen loan can cut that cost in half or more.
Additionally, loans offer longer terms, allowing for smaller installments that fit better into your budget.
So, for those who are suffocating under their credit card bill, this can bring immediate relief.
On the other hand, there are disadvantages that cannot be ignored.
Firstly, the loan introduces a new financial obligation, which can become unsustainable if the person does not control spending.
Additionally, some types of loans, such as secured loans, may put assets at risk, such as a car or property.
Finally, the longer term can increase the total cost of the debt, even with lower interest rates.
In short, the loan to pay credit card It is a powerful tool, but it is not without risks.
The decision must be based on a careful analysis of the CET, the term and your own payment capacity.
Rhetorical question: Are you ready to take control of your finances or are you just putting off the problem?
Loan to pay off credit card: How to Choose the Best Loan?
Choose the loan to pay credit card right requires research and planning.
First, compare the CET between different institutions, as it includes not only interest, but also fees and charges.
Digital banks, credit unions and fintechs often offer more competitive conditions than traditional banks.
For example, an online personal loan can have rates starting from 1.5% per month, while traditional banks can charge up to 4%.
Also, evaluate the term of the loan.
Longer terms reduce installments but increase the total cost.
A term of 12 to 24 months is usually enough to pay off credit card debt without prolonging the payment too much.
It is also important to check whether the loan requires collateral, as in the case of loans with a payroll deduction or pledge, which may offer lower rates but bring additional risks.
Finally, use tools such as loan simulators available on bank websites or platforms such as Serasa eCred.
These tools allow you to compare options and visualize the impact of installments on your budget.
Based on the tests we have carried out, choosing a loan with a low APR and an adequate term can save thousands of reais in interest.
Table: Comparison of Loan Modalities
| Modality | Average Rate (per month) | Average Term | Advantages | Disadvantages |
|---|---|---|---|---|
| Personal Loan | 1.5% to 4% | 12 to 48 months | Easy access, no guarantees | Fees can be high |
| Payroll Loan | 1% to 2% | 24 to 72 months | Low rates, payroll deduction | Requires employment relationship |
| Secured Loan | 0.8% to 2% | 24 to 120 months | Reduced rates, long terms | Risk of loss of property |
| Debt Refinancing | 1.2% to 3% | 12 to 60 months | Debt consolidation, affordable rates | May require rigorous credit analysis |
Frequently Asked Questions About Loans to Pay Off Credit Cards
| Question | Response |
|---|---|
| Can I take out a loan even with a low score? | Yes, but the rates may be higher. Secured loans or loans with collateral are more accessible for those with a low credit score. |
| Does the loan pay off the card debt automatically? | No, you receive the amount and need to use it to pay off the bill. Make sure you pay off the card immediately to avoid further interest charges. |
| Is it possible to negotiate card debt before taking out a loan? | Yes, many carriers offer discounts for paying in cash. Negotiate before taking out the loan to reduce the amount needed. |
| What is the risk of not paying back the loan? | In addition to interest and fines, you may lose assets (in secured loans) or have your name negatively impacted, making it difficult to access future credit. |
| Is it worth using the special check to pay the card? | Generally not, as overdrafts have fees that are just as high as credit cards. A personal or payroll loan is usually more advantageous. |
Loan to pay credit card: Conclusion
Take a loan to pay credit card can be an effective solution to reduce interest and reorganize finances, as we saw in Mariana's case.
However, without financial discipline, as in João's case, the loan may only postpone the problem.
Statistics from the Central Bank reinforce that credit cards are expensive villains, but loans require care so as not to become another obstacle.
In short, the flat tire analogy reminds us that the solution depends on how you “manage” your finances.
Therefore, before deciding, compare rates, terms and APRs, and commit to a solid financial plan.
The table of modalities and frequently asked questions can guide you through this process.
In the end, the question is not just whether it is worth taking out the loan, but whether you are ready to transform your relationship with money.
So, what will be the next step?
