What is the Best Advice to Clear Credit Card Debt?
Holding a credit card is highly beneficial in most aspects, however, if not managed efficiently, your credit card can become a liability due to constant accumulation of debt which needs to be paid back to the bank.
Most major banks offer a wide range of credit cards which come with different ranges of credit limit along with offers and rewards on each purchase you make. However, irresponsible expenditure can often result in increased debt which needs to be paid back at the end of the billing cycle to the bank. Ultimately, a credit card is a loan which is given to you by the bank and it’s best that it be repaid on time.
Here Are A Few Ways By Which You Can Clear Credit Card Debt:
This method of clearing your credit card debt is advised if you hold more than one credit card. If you have large debt accumulated on one credit card, you can opt for transferring the outstanding amount to another credit card.
In this way, you can get an interest-free credit period up to 3 months which helps in easing the burden, so that you can save up and clear the debt sooner.
Converting the payment to EMI
If the outstanding amount on your credit card is a higher amount, it might get difficult to repay the whole amount at once along with the added interest. To overcome this, you can request your merchant bank to convert the outstanding balance into EMIs. You can choose the tenure according to what the bank offers and with the given interest, you can repay the amount on a monthly basis.
EMI conversion gives you the convenience of paying the outstanding amount in small monthly installments at a fixed rate of interest. This way interest does not build up on the debt.
Speak to your card company
If you have been facing financial problems due to unemployment or any kind of financial crunch, it is important to keep in touch with a bank official so that they are aware. If no communication is given, the interest and the bill will keep piling up which will, in turn, result in a large amount of money to be repaid. If they deem your reason for not paying the bill as genuine, they might consider easing the recovery procedure.
Pay the debts with the higher interest first
Most people do not pay attention to this. If you have more than one credit card and multiple debts on those credit cards, it is strongly advised to clear the debt which has the highest rate of interest. Most people opt to clear the debt with the shortest tenure. Since your dues with higher interest tend to accumulate faster, paying this debt first helps you in saving money later.
Always pay more than the minimum due amount
Many people form a habit of paying the minimum amount due as it is allowed by the bank. What most people tend to forget is that if the minimum amount is paid, the outstanding amount keeps accumulating every month. The interest is added every month to the outstanding amount which makes it a larger sum of money to repay.
Opt for the Automatic Payment Facility
The automatic payment facility or ECS is one of the most effective methods of paying any loan or credit card bill on a monthly basis. This facility automatically deducts the credit card bill amount on the due date. Credit cards with higher credit limits and charge a higher rate of interest. Missing a due date of the bill payments can result in increased debt on a monthly basis.
Keep a limit on the number of credit cards
If you already own a credit card, you might receive many calls from banks make to offer you more credit cards with increased reward point offers and more benefits.
However, it is advised that you own one or at the most two credit cards so that managing it is easier.
Making a budget
Using these tips should help you clear your credit card debt. Apart from the points mentioned above, you should also make a budget for your credit card to make sure that you do not make unnecessary purchases and the money you save from there, to utilise in paying your credit card bill.
Taking a loan to pay credit card bill
If you have an accumulated and pending credit card bill which needs to be cleared, you can approach a bank for a personal loan. By doing so, you can use the money from the loan to pay off your bill. The advantage of taking a personal loan to pay the credit card bill is that a personal loan has a lower rate of interest and have increased tenure options, so you do not have to pay a large amount of money at one go.
Without clearing your credit card bill, you should not make any kind of purchases as it will add to your existing bill amount which will need to be paid all at once. For more information or details, it is advised that you visit your bank branch or call the bank executive.