Buried under credit card debt? Follow these tips

Buried under credit card debt? Follow these tips

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New Delhi: Credit cards have become extremely popular among younger generations in urban areas. With credit card readily available if you are employed and have a decent salary, people have almost stopped carrying cash and instead rely on credit cards. Nowadays, employed individuals are often given a credit card as part of the formalities when they join a new workplace.


People who are reckless with their money sometimes lose track and overspend on their credit card which leads to a very large bill that they are not able to pay. They make the mistake of paying the minimum amount due and carrying over the rest which continues to accrue high interest rate and before they know it, they are buried under a huge credit card debt.

Here’s how you can pay your credit card debt:

1. Reach out the issuer: If you have been paying the majority of your credit card bill on time, a hands-on approach can help you successfully pay credit card debt. If you have a good repayment record in the past, you can try to reach out to the issuer and request if the repayment terms can be relaxed, in case your bill is much higher than expected. If you have been a responsible customer, most lenders, if possible, will find a way out for you.

2. Concrete repayment strategy: To get out of debt, you could adopt either one or a combination of the repayment strategies. You can either ‘Pay More than Minimum’ or adopt the ‘Debt Snowball’ option. In case you have a surplus of savings, you can pay more than the minimum amount due every month to reduce your debt. Although you may land up paying more than the defined minimum, you will, at least, be reducing the interest charged on each pay period.

Another approach could be adopting the snowball method which knocks out your smallest debt first, followed by larger ones. This way you can prioritise the repayment list as per the amount, starting small. This method will help you eliminate your debt slowly and steadily.

You could also take the avalanche approach in which you pay off the card with the highest interest instead of starting with the lowest amount first. This is a faster and cheaper method compared to snowballing.

3. Convert to Personal Loan: If your credit card debt is huge and you are not sure how to repay it, you can convert your credit limit into a personal loan and repay the amount easily in EMIs. For example, Bajaj Finserv RBL Bank’s credit card offers emergency loan facility once a year for which once can get instant cash for up to 90 days. However, this is a costlier method as the interest rate on personal loan is extremely high. Opt this method only when you do not have any other way to repay your credit card debt. This way your burden will be reduced as you will be paying the debt in EMIs.

4. Standing instruction: Most lenders, credit card companies have the facility of automating credit card payments. You can set standing instructions for payments so as to avoid late charges on missing the due date. You can set up the standing instruction option for your credit card, for a specific date every month. Make sure that you have sufficient bank balance in your account in case you’re practising the debt snowball or debt avalanche approach.

5. Debt consolidation: You can also consider consolidating all your credit card payments into one account so that you’re only making one payment every month to get rid of the balance. Credit card companies, lender provide debt consolidation plans at low-interest rates. You could use the Debt Consolidation Calculator available online to see how this option will work for you.

It is worth mentioning that in order to avoid getting stuck under debt, it is wise to trim expenses. As soon as you get your salary, the first thing you must do is to make all the credit card payments, EMI payments and then budget for the rest of the month. Make sure to pay off your dues before spending as it will help your avoid debt traps.

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