Ways to pay off your credit card debt faster
Credit cards act as a solution to most of your purchases and problems. With the advent of a wide range of credit cards offered by major banks, you can pay for anything and everything with your cards, even groceries.
These credit cards are a solution, yes, but only when used smartly. If you hand over a credit card and you go on a shopping spree, it’s not spending wisely. Your card becomes an obligation to pay a large bill at the end of the month.
Credit card bills being added on a monthly basis and unable to pay in full has become a common practice for most of people these days. Due to this, every month, your bill gets added to the previous months resulting in huge debt repayment.
This is what happens when you have a credit card. If you hold more than one, if you don’t spend wisely, you have many debts on you that affect your monthly budget as well as your credit report.
Credit card debt cycle is a real term for where you can spend more with a credit card. This leads to a huge credit card bill, probably more than your budget. In return, it borrows money in the form of loans to repay these debts. Hence, a circle.
7 Ways You Can Pay Off Your Credit Card Debt
Make a note of all debts to be paid
Instead of looking at your credit card bill all at once, which is too high, break it down into smaller parts. It helps you classify it. If you have more than one credit card, it is advisable to pay the bill on priority basis.
Now how do you differentiate which bill needs to be paid first? It depends on two parameters which are the interest rate of the card and outstanding bills.
For example if you have only one credit card and the total bill is Rs 20,000. If you divide it into 4 it is a better strategy. It becomes easy if you look and know that you have to pay Rs 5,000 instead of Rs 20,000 in total.
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Preference
It is advisable that you pay the credit card bill on which the interest rate is higher and not the credit card bill of higher amount. This will save you from paying a large amount due to accumulated interest in the coming months.
If you think paying only the minimum due amount helps you to set it aside for a while, think again as it can affect your credit report and score. Banks will monitor your activity and may suspend your credit card if they see that you are spending recklessly.
Pay card bills with minimum balance
Once you have paid off the credit card bill with a higher interest rate, you can switch to a card with a lower balance.
It totally depends on which bills have been deposited and on which card. This may not always happen. Sometimes, the card that has the lowest bill may be held by the card that has the highest balance. So you are clearing two important Bills.
Once you clear the credit card with the highest interest, you can shift to the credit card with the lowest outstanding balance. Paying it off gives you the much-needed mental boost to pay off the rest of the bills.
In India, there is no credit card like the United States that has an annual percentage rate of 0%. These cards are used for credit card balance transfer. During the period of 0% interest, the cardholder can pay all pending bills.However, there are cards that offer lower interest rates than other cards.
In this case, you can hold two credit cards, transferring the balance from the credit card with the higher interest rate to the credit card with the lower interest rate. In this way, you save a large part of the money on interest.
Taking out a loan to pay off credit card debt
If your credit card bills are too high to pay in installments, there is another option by which you can pay it in one go.
If you have a good credit score, you can apply for a personal loan to pay off all your credit card bills at once. This way, you can become debt free and pay less interest. Personal loan interest rates are lower than credit card interest rates. Also, depending on the tenure, your monthly EMI will also be a nominal amount.
Convert outstanding bill into EMI
If nothing else, you can always visit your bank branch and request for conversion of your outstanding credit card bill into EMI.
Most of the banks charge a nominal interest rate for these EMIs with the option of a specified tenure. These EMIs can be deposited directly into the bank branch with a check or can be deducted directly from your account with the bank’s automatic payment facility.
