• How to pay off your Credit Card Debt?

    Credit cards can be the best boon one could receive if used effectively to manage money and can be a definite one way ticket to the worst debt trap if used recklessly as well.

    Below are 10 absolutely easy and smart ways for you to pay off your credit card debts that are constantly compiling over a period of time:

    1. Use the Balance Transfer option: Most of the times, you get into tricky debts with credit cards because you lose track of the amount that is due on the various cards. The balance transfer facility lets you shift your outstanding balance from one card to another or from multiple cards to just one card. This ensures temporary relief from debts. If you are caught up in one such vicious cycle of debt, go ahead and use the balance transfer facility to transfer your dues from one card to another. Meanwhile, the other bank will offer a credit-free period for easy repayment of the pending amount. This credit-free period can be up to 90 days and once this period ends, a regular interest will be charged to the cardholder.

    2. Convert all your payments to monthly EMIs: In a situation where you are unable to pay off the outstanding balance on your credit card, you can talk to a representative at the bank and request to have your outstanding bill converted to a fixed monthly EMI. This will help you immensely because you will know the amount that needs to be repaid well in advance and can make sure you have sufficient funds in your account for the same. This usually has a processing fee which is about 1 - 2% of the outstanding amount that is due. After converting your credit card bill into a monthly EMI facility you also have to pay a nominal charge of 2 - 3% for availing the convenience of the EMI facility.

    3. Prioritize those debts that have a higher rates of interest: This is the most important point that people forget to consider. When you land yourself in credit card debts, the first thing that comes to your mind is to repay the one on the card with the shorter due date first. This is a very common mistake we all make. Instead of this, you must first repay debts on the card which charges the higher rate of interest. This will help reduce the total interest outgo. It is worth remembering that unpaid dues on the outstanding balance with higher rates of interest accumulate faster.

    4. Keep your bank updated: There could be a situation where you are unable to pay your dues because of a financial setback such as losing your job or any personal reason. The rates of interest will only keep accumulating. In such a scenario, it is advisable to talk to the bank and explain your situation. If your situation and reason is genuine, the bank, in most probability, will relax their recovery of interests. If you do not communicate with the bank at an earlier stage, the issue will only get complicated with the interest getting compounded over a period of time.

    5. Make the best of holiday period: One of the best ways to manage finances on your credit card is by taking the most advantage of the available holiday period. You can enjoy an interest free period on your card of up to 50 days depending on your billing cycle and the date on which you are making the purchase. Therefore, if you are unfortunately facing a financial setback, you can plan your purchases on your card accordingly and the maximum holiday window to avoid paying an interest during that time.

    6. Try repaying more than what is required every month: Most cardholders make the mistake of paying only the minimum amount that is required. This is another reason why the debt constantly increases and results in a flux. One must remember that the rates of interest on credit cards is very high and paying only the minimum amount will only add on to the outstanding amount that is due. Therefore, try to pay more than the minimum amount and close the bill at the earliest.

    7. Choose the automatic payment facility: Choosing an automatic payment facility to repay the bills on your credit card is the best option you can opt for. Since all credit cards come at high rates of interest and even higher fees for late payments, it's wise to go in for this facility so that we do not miss out on bill payment dates. By doing this, the outstanding due will get deducted from your account directly without any sort of manual intervention and you will be relieved of the stress of missing any repayment deadline in case you cannot access your bank for any particular reason.

    8. Be aware of your billing cycle: If you wish to take the most advantage of the credit-free period on your credit card you must be aware of the card’s billing cycle. The credit-free period doesn’t start on the day you make the purchase, it starts from the first day of the billing cycle each month. For example: If the billing cycle of the card starts on the 5th every month, then any purchase you make on the 4th of the month will give you only 1 day of credit-free period. If the purchase is made on the 6th of the month, then you will be able to enjoy 59 days of interest free window. If you are well aware of your billing cycle, it will help you plan your purchases better, plan your finances better and save more with each transaction on your credit card. After all, it is a device we are meant to benefit from.

    9. Try not to own too many credit cards: You will receive multitude of offers from sales executives of various banks and they will all seem to be the most perfect card for you! It is undoubtedly the most valuable financial accessory, but having too many credit cards only increases the chances of falling into a huge debt that you will not even be aware of. Policies which entice you to buy now and repay later are the most enticing ones and lure even the most careful spenders to overspend on non-essentials. Keep one, use it as and when need. Don’t spend money you don’t have.

    10. Always keep a track of your bills: Sometimes there are some extra charges on your bills by the banks and sometimes there could also be erroneous transactions. If you are a credit card user who stashes away their bills in some corner of the house without caring to check them you could be in for a shock. Fraudulent transactions by unidentified elements who have gotten hold of your credentials can pull you into a flux of debt in no time. Keep track of every transaction you make and go through the statements before you pay your dues. Do not hesitate to get in touch with the bank if you are unsure of any component on the statement of account.

    If you manage to pay your bills on time, credit cards are actually the most useful financial tools and can actually be considered free short term loans. Credit cards help you keep track of your spending habits than with cash; they also allow you to receive a transaction history free of cost. Most credit cards also offer warranty extensions without any additional charges on your purchases. If these features are used in the most optimal way possible, then you will not face a plastic money induced financial disaster.

    Advantages outnumber the disadvantages. One must be wary and wise with the use of this tool and make sure that you spend lesser than you actually make.

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