Pay Off Personal Loan? Discover How Fast (2026)

Many Australians find themselves juggling multiple debts and searching for effective ways to manage their financial obligations. One common question is whether you can pay off a personal loan with a credit card. At first glance, this might seem like a convenient solution, especially if you're looking to consolidate debt or capitalise on lower interest rates. However, navigating this financial strategy requires a clear understanding of the pros, cons, and potential pitfalls.

Understanding Paying Off a Personal Loan with a Credit Card

To begin with, it's crucial to understand what it means to pay off a personal loan with a credit card. Essentially, this involves using your credit card's available credit to pay off the existing balance on your personal loan. While this might sound straightforward, not all lenders or financial institutions allow this transaction directly.

Typically, this process might involve a balance transfer or cash advance. A balance transfer means moving your loan balance to a credit card offering a lower interest rate, often as a promotional offer. A cash advance, on the other hand, involves withdrawing cash from your credit card to pay off the loan. However, cash advances often come with high fees and interest rates that start accruing immediately.

Key Information About Paying Off Personal Loans with Credit Cards

Before considering this option, it's important to weigh the potential benefits and drawbacks, alongside understanding the current market conditions in 2026.

Interest rates for credit cards in 2026 can range from 6.49% for promotional balance transfers to upwards of 20% for standard purchases. Personal loans typically have interest rates ranging from 8% to 15%, depending on the lender and your creditworthiness. With Esteb and Co's access to 83+ lenders, you might find competitive rates that suit your financial situation.

Steps to Pay Off a Personal Loan with a Credit Card

If you decide that paying off your personal loan with a credit card is the right strategy for you, follow these steps:

1. Review Your Credit Card Terms: Ensure you understand the terms of your credit card, especially the interest rates for balance transfers or cash advances.
2. Contact Your Lender: Check if your personal loan lender allows payments via credit card. Not all lenders accept credit card payments directly.
3. Choose the Right Strategy: Decide whether you will use a balance transfer or cash advance based on your card's terms and your loan's conditions.
4. Calculate the Costs: Consider any balance transfer fees, cash advance fees, and the potential interest cost to ensure this move will save you money.
5. Execute the Payment: Once sure of the costs and benefits, proceed with the transaction, ensuring all details are correct to avoid any mishaps.
6. Plan Repayments: Create a repayment plan that considers the credit card's payment terms to avoid accruing additional interest.

Tips and Considerations

Before using a credit card to pay off a personal loan, consider these expert tips:

• Check for Promotional Offers: Some credit cards offer promotional balance transfer rates that could save you money. Ensure you understand when the promotional period ends and what the subsequent interest rate will be.
• Avoid Cash Advances: Due to their high fees and immediate interest accrual, cash advances can quickly become expensive.
• Mind Your Credit Score: Large credit card transactions can impact your credit utilisation ratio, potentially affecting your credit score.
• Look for Better Loan Offers: Consider refinancing your personal loan instead. With access to Esteb and Co's extensive panel of lenders, you might find a more favourable loan option.
• Seek Professional Advice: Consult with a financial advisor or a mortgage broker, such as Esteb and Co, to explore all your options before making a decision.

Frequently Asked Questions

• Can I directly pay my personal loan with a credit card?
  Not directly. Most lenders do not accept credit card payments for loan balances, but you can use balance transfers or cash advances as indirect methods.
• What are the risks of using a credit card to pay off a loan?
  The main risks include high interest rates after a promotional period, fees associated with cash advances, and potential impacts on your credit score.
• Are there alternatives to using a credit card for loan repayment?
  Yes, consider refinancing your loan or consolidating your debts into a new personal loan with better terms.
• Is a balance transfer worth it?
  It can be, if you can pay off the balance before the promotional rate expires. Always calculate the potential cost savings.
• How does this affect my credit score?
  Using a large portion of your credit limit can increase your credit utilisation ratio, potentially lowering your credit score temporarily.
• What if I can't pay off the credit card balance quickly?
  This could result in high interest costs, making it crucial to have a repayment plan in place before transferring the balance.