Use of credit cards has become a daily routine for many people across the world. Transactions with a credit card are easy, safe and quick. Most of the top-rated banks offer a wide variety of credit cards in India, with many attractive benefits such as a welcome gift, cash-back offers, travel benefits, add-on cards, etc. But if you do not use it with caution, this can lead to an accumulation of debts over time. The failure to make timely repayments affects your credit score negatively.
How To Pay-off Credit Card Debts Quickly?
Easy availability of credit cards through the online application process, simple screening and rush to win essential reward points on usage has led to their indiscriminate use. It often results in missing repayment deadlines and mounting debts. Here are some smart ways to manage your credit card debts:
Keep a tab on your spending
Excessive and impulsive spending is the leading cause of increasing debts on credit cards. Close monitoring of your expenditure and planned use of credit is the key to reduce your debts considerably. Review your credit card bills and shortlist the items that can be grouped as ‘unnecessary’ or ‘impulsive’ and avoid them in the future.
Avoid using credit cards
If you are a compulsive shopper and cannot restrict your expenses, you should stop using your credit card online. By doing so, you will have to pay in cash or use the available balance in your savings/ current account, which will help you develop financial discipline. It can prevent the rising credit card debts under your name.
Repay by availing a low-interest loan
Credit cards come with a high-interest rate on the unpaid amount compared to any secured or unsecured loan. It is always advisable to repay large credit card dues by availing a personal loan, loan against securities, or borrowing from friends or family. The interest accruing on your loan will be comparatively lower to interest charged by the banks for credit card usage.
Opt for EMIs
If it is difficult for you to pay your outstanding dues in a single go, you can talk to your bank and get an EMI facility. It will ease the burden of repayment but will incur some extra processing fees and a little hike in the rate of interest.
Avail balance transfer facility
It refers to the transfer of your credit card dues from one card to the other. It will give you temporary breathing space from your debt repayment as the new card will offer you a credit-free time slot of about 90 days. You can arrange funds in the meantime for repayment.
Give priority to dues with the highest interest rate.
If you have debts on multiple cards, it is advisable to clear off the obligations on the higher interest rate cards first. By doing so, you reduce the total interest payment and save on the pay-offs.
Opt for automatic payment facility
Choosing an automatic payment facility helps to make timely payments for your credit card dues. The bank will automatically deduct the bill amount on the due date from your savings/ current bank account. It is a good option if you tend to forget the billing date or use multiple credit cards.
Avoid having multiple credit cards
You are bound to get lucrative offers for new credit cards from various banks and their sales executives. But having multiple cards increases the risk of managing multiple payment schedules, missing deadlines and beginning the debt cycle.
Credit cards undoubtedly offer a hassle-free way to make your purchases and manage monthly expenditure. However, you have to be careful in its use and restrain your shopping impulses to avoid mounting debts, which may become difficult to repay over time.