Pay Personal Loan with Credit Card? Discover Safe Options

Managing multiple debts can feel overwhelming, especially when juggling a personal loan and a credit card. You might find yourself asking, "Can I pay a personal loan with a credit card?" While this may seem like a straightforward solution, it comes with its own set of considerations and potential pitfalls. Let's explore this topic in depth to help you make an informed decision.

Understanding Paying a Personal Loan with a Credit Card

At its core, paying a personal loan using a credit card involves transferring the balance of your personal loan onto your credit card. This might be done through a balance transfer, where the credit card company pays off your loan, and you owe the balance to the credit card provider instead. It's important to understand the implications of this financial manoeuvre, including interest rates, fees, and credit score impacts.

Current Market Information and Key Considerations

As of 2026, Australians face a range of interest rates for personal loans, typically between 6.49% and 12%. Credit card interest rates, on the other hand, can range from 14% to over 20%, depending on the card and issuer. Balance transfer offers can sometimes provide an introductory rate as low as 0% for a limited period. However, once this period ends, standard rates apply, often making it a costly choice if the balance isn’t cleared in time.

Eligibility criteria for these financial products can vary. Generally, you need a good credit score (above 650) and a stable income to qualify for a balance transfer credit card. Additionally, the credit limit must be sufficient to cover the personal loan balance.

Steps to Pay a Personal Loan with a Credit Card

If you decide that transferring your personal loan balance to a credit card is the right move, follow these steps:

1. Evaluate Your Financial Situation: Assess your current debts, interest rates, and your ability to repay within the balance transfer period.
2. Research Balance Transfer Offers: Look for credit cards with the longest 0% introductory period and the lowest balance transfer fees. Esteb and Co's panel of 83+ lenders could be a valuable resource in this process.
3. Check Eligibility: Ensure you meet the credit card issuer's criteria, including credit score and income requirements.
4. Apply for the Card: Once approved, initiate the balance transfer process. This typically involves providing your loan details to the credit card issuer.
5. Pay Off the Balance: Aim to clear the transferred balance before the introductory period ends to avoid high interest rates.

Tips and Considerations

Here are some expert tips to help you navigate this financial decision:

• Read the Fine Print: Always understand the terms of the balance transfer, including fees, duration of the intro rate, and the standard rate post-intro period.
• Avoid New Purchases: New purchases on a balance transfer card may incur high interest rates immediately, offsetting any savings.
• Set a Repayment Plan: Calculate how much you need to pay monthly to clear the balance within the intro period and stick to it.
• Consider Alternatives: Before proceeding, explore other debt consolidation options, such as a lower rate personal loan through Esteb and Co's extensive lender network.

Frequently Asked Questions

1. Is it possible to pay any personal loan with a credit card? Generally, yes, if your credit card issuer allows balance transfers for personal loan payoffs.
2. What are the risks of using a credit card to pay a personal loan? Risks include high interest rates after the introductory period, increased debt if not managed carefully, and potential impact on your credit score.
3. Does transferring a personal loan to a credit card affect my credit score? It may, as it involves a hard inquiry and increases your credit utilisation ratio.
4. What if I can't pay off the balance before the introductory rate ends? You may face high interest rates, potentially leading to increased debt.
5. Are there fees associated with balance transfers? Yes, typically 1% to 3% of the transferred amount.
6. Can Esteb and Co help find a suitable balance transfer offer? Yes, with access to 83+ lenders, Esteb and Co can assist in finding competitive offers tailored to your needs.
7. Should I seek professional financial advice? It's often beneficial to consult with a financial advisor to ensure you're making the best choice for your financial situation.