Know-How To Get Out Of Credit Card Debt

Credit Card Debt

Making big purchases becomes a cakewalk with credit cards. You get attractive rewards, cashback, bonuses, and flat discounts on online shopping. As a result, COVID may have increased your card usage. With all the financial insecurities, a credit card can be of great help. But what if this godsend becomes a bit of trouble? How do you manage to contain and get rid of card debts? 

The three P’s: Prevent, Prioritize, and Pay-off: 

As the saying goes, prevention is always better than cure, especially with a credit card. You should avoid accumulating debts and use your card wisely. Evaluate your financial stance and list out all that you owe. The first step is to acknowledge the debt. Knowing the problem is the beginning of a solution. No remorse, no regrets, just give it a thought.    

Next, you should prioritize and form an order of sequence. Know the interest rates on your credit cards and pay the bill with a higher interest rate first. Next, you can choose the one with the least pending balance. This will provide you with additional psychological relief. By prioritizing, you’ll make sure your debt never goes out of control. Ask an expert about the snowball method of paying small debts steadily; this will help you manage things well.

Transfer your debts to a lifetime free credit card:

Some cards do not charge an annual fee. Transferring your debts to a card with a zero interest rate should enable you some ease. However, transferring is possible only if you have a good credit score.   

Smart conversion of debts to EMIs: 

Ask your bank to convert your outstanding into comfortable monthly installments. The interests charged here are nominal. You can deposit the amount in cheque or cash, and banks also offer auto-debit options.

While shopping online, you should opt for no-cost EMIs. This saves you the interest charged and reduces your debt accumulation.  

Pay your bills duly:

This might sound basic, but paying your bills diligently will not allow debt creation in the first place. This saves you from being trapped in a debt cycle. One way to do this is to add your periodic expenses to your credit cards. 

Next, planning a budget and sticking to it always helps. Then, when you make a major expense, make sure to sort it out and adjust accordingly.     

Opt for personal loans or top-up loans:

You can also opt for personal loans if your dues go beyond your means. If you have a good credit score, your bank will lend you loans at a comfortable rate of interest. You can use it to clear all your debt at once. The interest charged varies from bank to bank, but it is generally lesser than interest on a credit card. The interest rate on personal loans can be as low as half that on a credit card.  

Other loans include top-up loans. This is possible if you have existing home loans and you have made regular repayments against the same. The interest rate on this one is usually similar to home loans, except that there is no tax exemption.

Another way can be asking your family members or friends for financial assistance. If this can be managed, this is the easiest way to manage your debts. 

Liquidate your past investments:

You can break your FDS or other investments to pay off your debts. Use this in dire circumstances. Using your savings except for in emergencies may rob you of future fund securities. Stay vigilant and make proper introspections. For obvious reasons, keep this as your last resort.

Seek help: Ask the experts.

Well, this can work like magic. Banks offer credit counseling for customers who need help in managing their debts. If you think that the problem is becoming overwhelming, you can seek help. You can ask your friends, relatives or family members for financial assistance as well. 

If nothing works, professional counselors are always at your service to help you. Follow their advice and work as they say. They are usually trained to navigate you out of your debts.  

Work on better managing your finances:

You can avoid the debt as a whole. Manage your finances well and keep an eye on your credit limit. Using your finances efficiently will help you distinguish between your needs and your wants. If you create a plan or a budget, stick to it largely. This isn’t just about saving money; this relieves your mental stress as well. 

Credit cards serve best when they are best used. Out of all the measures highlighted above, balance transfers, a lifetime free credit card, and home loan are better sustainable. The best approach is being watchful enough that debts don’t clog you financially. Escaping the debt can be a tough job, but if you get things right, things can be simple. 

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Nirupama Verma is a self passionate blogger, managing a bunch of informational blogs. She has written a lot of informational content for several popular blogs.

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