Credit card bills can balloon into a large debt if you do not pay their outstanding bills in time. Hefty charges and interest rates can double your credit card in no time. Hence, it is crucial to repay the outstanding amount as soon as possible.
Here are a few ways that you can consider to get out of credit card debt at a faster pace.
Opt for balance transfer facility
You can transfer your outstanding credit card bill from one card to another card at a lower rate of interest. The other card issuer you will give you time of up to six months to repay the bill. For instance, if you have Rs 50,000 outstanding on your current credit, that you have to pay within the due date; failing which a 36% per annum interest would be levied.
In such scenarios, you can opt for balance transfer. The other card issuer will give a cheque of Rs 50,000 in favor of your existing card to clear the outstanding. You will also get up to 6 months to repay Rs 50,000 at a lower rate of interest of up to 1.5% per month.
Convert credit card outstanding to EMI
Majority of credit card issuers allow users to convert large outstandings into EMI at a much lower rate of interest. However, they charge a processing fees of up to 2% to convert your outstanding into EMI.
Pay credit card with the highest interest rate first
When you have multiple credit cards to repay then it is advisable to first repay the one bearing the highest rate of interest. This will help in reducing the overall interest load. However, in the process, make sure to pay the minimum of other cards to avoid late payment charges.
Use card holiday period efficiently
The time between making a purchase and payment due date is normally 50 days. If you are running short of funds then plan your purchases in a way that you get maximum holiday period to repay the amount. For instance, avoid making purchases when the billing date of the card is approaching. Make large purchases at the start of the billing cycle to get more days to repay the amount.
Credit cards can charge up to 46% per annum rate of interest on your outstanding amount. However, you can get a personal loan at around 15% per annum. Here, the math really is in favour of taking a personal loan to clear your credit card outstanding. You can also take personal loan with a longer tenure to pay smaller EMIs.
Credit card can be managed efficiently if you use them with some discipline. Do not use multiple credit cards and take new debt only when you have cleared your older credit card debt. Cut back on unnecessary expenses on lifestyle, online shopping, and others to keep your credit card statement healthy.