There are many ways that can help you in getting rid of credit card debt. To know the best 5 of them, refer to this article.
A credit card owner gets access to every possible benefit. Even during a financial crisis, they have easy access to credit. They can easily make big purchases without much hassle.
Trouble during travelling? Your credit card can help you get easy travel insurance. Trouble finding a hotel? Your credit card can bring the best of deals for you.
Anything you wish, your credit card can bring that to you.
But what about the possible accumulation of debt? Would the credit card companies be willing to reduce interest rates in case you default on your payments due to some financial emergencies?
Most importantly, is it really that easy to get rid of the debt when interest is actually charged on your outstanding balance? We think not.
No matter how beneficial credit cards are, the question of debt often discourages us to opt for them. And why not? No one wants to stay in a debt loop especially when there is barely any way out.
In case you are currently dealing with a credit card debt, here are the 5 things you can use to eliminate it:
1. Transfer your balance to some other account
If you are stuck in a credit card debt that has to be gotten rid of in the current billing cycle, there is no better option than a balance transfer.
Whether your bank or credit card company allows this or not depends on their terms and conditions. But if they do, make sure that you use it. It might be possible that they charge you some additional processing fee for this purpose. In case you have another credit card with this facility, you must transfer your balance there.
The reason why this can help you is that after transferring, you’ll get access to an extra 45 to 90 days to clear your payments with the new card. This time should be enough for you to find some financial resources like loans to clear your dues.
Just make sure that you don’t default on payment after this as if you do, the company or bank will definitely charge their regular APR making situations worse for you.
2. Lookout for converting payments into EMIs
When you are in a huge debt with a bad financial condition, it is utterly difficult to make repayments in just one go. You may not even have access to any financial sources to make such a huge payment. This is where the EMI option works the best.
Through EMIs, you can repay your debt in small proportions without damaging your financial situation further. In case your bank or company allows this option- you must use it! With affordable monthly payments up to a certain period (most probably 1 year), you will be able to get rid of the debt.
However, before this option, it is generally advisable to check the APR rate of your card as it may rise if you go for EMIs (may range from 12% p.a. to 36% p.a.). Also, there may be a processing fee (generally 1% to 3% of the total outstanding amount) charged by the bank or company to convert your debt into monthly instalments.
3. Pay the highest possible amount
Perhaps the quickest way to get rid of the credit card debt is to repay it through maximum limits possible. While it may not be affordable for everyone, it can be opted by those cardholders whose financial background isn't that weak or those who have access to some loan.
The biggest mistake to do, while handling the credit card debt, is to skip the repayment entirely when it feels too much. You must not do it.
Instead of paying nothing or just paying the minimum amount, it is better to pay back the maximum that you can.
Paying the maximum sum possible will help to eliminate the mountain of debt with its high APR. Also, in case you buy another credit card, there will be less problem in accessing it since you would have already paid the maximum amount possible on your previous credit card.
4. Take a loan if you can
While it may seem to be an obscure idea to get into a loan after being already stuck in a debt trap, it is not a bad option.
Not at all bad if you are able to find a loan with the least possible interest rate with your good credit score (in case you pay your loan EMIs timely, you will be able to maintain it). Yes, taking a personal loan must be the last resort option. But when you know that your credit card debt will eat up all your savings and finances, you ought to do it.
Here, another option can be a secured loan against any property that you own. You may opt for a Loan Against Property or a Loan Against Securities- it depends on your financial portfolio.
Make sure that you take a loan for the required amount and avoid the temptations of taking it for the maximum amount. However, if your assets or investments aren’t that profitable, you must consider liquidating them instead of taking a loan against them.
5. Try negotiating with your bank or credit card company
Lastly, when nothing works in your favour, you may turn to your credit card company or the bank itself. However, for them to go easy on you, there must be a solid and valid reason for why you defaulted on payments.
In case you couldn't do so due to a job loss or say a medical emergency, you can expect them to negotiate the terms with you. Explain your situation to them. In the best possible case, they may agree to give you some relaxation in interest rates for some time period- for sometime at least, you will get a room to breathe and look for alternative financial resources.
Whatever they offer, make sure that you carefully go through the terms and conditions.
It is not an easy task to cope up with credit card debt. You may get attracted to a credit card due to all the alluring benefits that the company provides, but in the end, it is you who has to deal with all the interest payments, additional fees and charges.
Whenever you look for a credit card, it is advisable to be clear about the purpose behind this purchase. Know which type of card you want and get it- never run behind temporary schemes and coupons. In case you are stuck in a credit card debt, you can refer to the above points and try to eliminate it.
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