She Consolidated ₹7 Lakh in Credit Card Debt & Saved ₹2 Lakh in Interest!

In 2025, credit card debt continues to be a significant financial burden for many Indians. With interest rates often exceeding 36% annually, it's easy to see how balances can spiral out of control. A recent case highlighted in the Economic Times detailed a 42-year-old salaried individual who accumulated ₹62 lakh in debt, including ₹12 lakh on credit cards, due to poor financial decisions and stock market losses.

However, not all stories end in despair. Let's delve into how one individual managed to turn her financial situation around by consolidating her credit card debt.

Priya, a 32-year-old professional in Mumbai, saw this unfold firsthand. She had three cards. Her total credit card dues reached ₹7,00,000. Each card charged her 36% interest per year, which is 3% monthly. Her monthly outflow was over ₹21,000, most of which went to interest. She paid and paid, but the balance never really reduced.

She knew something had to change, so she did something bold. She took out a personal loan, closed all credit card balances, and moved to just one EMI. That move saved her over ₹2,00,000 in total interest.

What Is Credit Card Debt Consolidation?

Debt consolidation means you take out one new loan to pay off old ones. In this case, credit card balances. Instead of paying 36% to card companies, you get a personal loan at 13% to 16%. You use the loan to pay off all cards. Then pay just one EMI every month.

Here’s how Priya’s card debt looked before consolidation:

After consolidation, she got a personal loan for ₹7,00,000 at 14% for 5 years. EMI came down to ₹16,279. She saved ₹5,000 every month and cleared the debt faster.

Compared to what she would have paid on credit cards (over ₹5,00,000), the savings were huge.

This is not just maths. It’s stress reduction too. One EMI. One due date. Clear loan path. That helps emotionally.

Why This Works for Salaried Professionals

If you earn regular income and your credit score is decent (say 725+), banks offer you a personal loan without asking for any security. Use that to clear all high-interest credit.

Let’s look at a typical salaried person’s case:

If this person uses a personal loan to close cards and pays ₹16,000 EMI, he still saves ₹2,000 monthly. Plus, no revolving credit trap.

Now the catch. You must stop using cards after consolidation. Cut them or lock them. Or they’ll again pile up.

Also, make sure you choose right bank. Some charge 3% processing fee. Some add insurance to loan. Read everything.

How to Start Consolidation Today

Here are steps to do it smartly:

1. Calculate All Dues: Add up every card balance and rate.
2. Check Your Credit Report: Go to CIBIL and check your score. You need 725+ ideally.
3. Compare Lenders: Go to aggregator sites. Compare interest, fees, tenure.
4. Apply Only Once: Too many applications reduce credit score.
5. Choose Lower Tenure: 3 to 5 years max. Don’t drag it to 7 years.
6. Pay Cards Immediately: Don’t wait. Use loan money to close all balances.
7. Avoid Card Usage Again: Shift to debit cards if needed.

Also, keep your EMI under 40% of your income. That’s called the FOIR rule (Fixed Obligations to Income Ratio). Lenders check this.

Hidden Charges That Hurt: Read Before You Sign

Most people miss the fine print. That’s where the trap hides. Personal loans often come with extra costs. Not just interest.

These are common charges:

Before signing any loan form, ask your lender:

• Is insurance compulsory?
• Can I prepay after 6 months?

• Is there a foreclosure charge?

   

Conclusion

Debt is not just about interest. It kills peace. Juggling four cards, remembering due dates, missing one EMI, then paying late fees, it’s a loop. You must cut that loop.

A personal loan with a fixed rate, fixed EMI, and a clear end date helps you come out clean. Priya did it, and many others have. You can, too.

Don’t wait till next billing cycle. Don’t let ₹7,00,000 become ₹9,00,000. Act when the numbers are still in control.

Debt consolidation is not just a trick. It’s a tool. But only when you use it once. And use it right.

FAQs

1. Can I include car loans or BNPL dues in debt consolidation?
Yes, if you get a high enough personal loan. But keep the new EMI within your salary limits. Prioritize high-interest ones.

2. What happens to closed credit cards after consolidation?
They stay on record. You can keep them inactive or cancel them. Better to keep old ones open for credit history, but stop usage.

3. Will my CIBIL score drop after loan approval?
Slightly, due to an enquiry and a new loan. But if you close cards fast and pay EMIs regularly, your score will rise in three months.

4. Is balance transfer better than personal loan consolidation?
Balance transfer offers a 0% rate for 3-6 months. This is good if you can clear it in that time. Otherwise, a personal loan is better for the longer term.

5. Can self-employed or freelancers use this method?
Yes, but harder. You must show proof of income, GST returns, or bank statements. NBFCs may help more than banks in such cases.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?