Employed individuals are often given a credit card as part of the formalities when they join a new workplace. With the security of regular pay, it may sometimes happen that you overspend on your credit card. And before you know it, there is a very large bill that lands on your doorstep.
How To Pay Off Credit Card Debts
1. Reach out to Your Issuer:
A hands-on approach is what it takes to successfully pay credit card debt. And the first step is to reach out to the issuer and check if the repayment terms can be relaxed, in case the bill is much higher than expected. Most lenders will find a way out for you, if possible.
2. Have a Concrete Repayment Goal and Strategy:
Additionally, you could adopt either one or a combination of the following strategies to address the credit card debt issue:
- Pay More than Minimum
If you have surplus of savings, it is prudent to pay more than the minimum amount due every month. While you may land up paying more than the defined minimum, you’re at least reducing the interest charged on each pay period.
- Debt Snowball
You could adopt the snowball approach which knocks out your smallest debt first, followed by larger ones.
You could prioritise the repayment list as per the amount, starting small. This methodology is to get you going while you keep eliminating your debt.
Additional Read: How To Use Credit Card Wisely
Just like the snowball approach, an avalanche approach could be adopted to pay off the card with the highest interest as compared to starting with the lowest amount first. This not only swaps your priorities but also tends to be a faster and cheaper method than snowballing.
- Convert to Personal Loan:
You could also convert your credit limit into a personal loan and repay the amount easily in 3 EMIs. For instance, Bajaj Finserv RBL Bank’s credit card offers the facility of emergency loan once a year for which you get instant cash for up to 90 days.
- Set Standing Instruction:
Every bank has the facility of automating credit card payments to avoid late charges on missing the due date. You could set up the standing instruction option for your credit card, for a specific date every month. However, do ensure that you have sufficient bank balance in case you’re practicing the debt snowball or debt avalanche approach.
3. Consider debt consolidation
You could also consider consolidating all your credit card payments into one account. That way, you’re only making one payment every month to get rid of the balance. Bajaj Finserv provides debt consolidation plans at low interest rates. You could use the Debt Consolidation Calculator.
Additional Read: Check Credit Card Balance
4. Curtail your expenses
It’s wise to trim expenses at such crucial moments. As soon as you get your salary, the first thing you could do is to make all the credit card payments and then budget for the rest of the month. Adopting a prudent approach by paying off your dues before spending, is a long-term strategy that will also boost your credit score.
In case you might need financing of any sort in the future, the credit score is an important metric that lenders will check.
By identifying and addressing the credit card debt proactively, you can not only adopt an effective repayment strategy but also plan your expenses realistically.
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