Smart Tips to get out of the sticky credit card debt


Credit card purchases can be useful and beneficial if one can be committed to spending within limits and can pay off their dues on time. If not then, one can land into a serious debt trap that can be difficult to get out of. 

Here are some of the common mistakes made by credit card users which land them into a debt trap:

Not paying the entire credit card bill

Credit card issuers impose heavy finance charges of 24-49% p.a. on the unpaid proportion of credit card bills and reverse the interest-free period on new credit card transactions till the repayment of the unpaid credit card bill. 

The best way to deal with it is to opt for the EMI conversion option because the interest rate charged in this option is much lower than the finance charges levied on unpaid credit card bills. The repayment tenure can be kept anywhere from 3 to 60 months depending upon the card issuer. 

 Paying the minimum amount due by the due date

Just repaying the minimum amount due does not save the users from huge finance charges. It only saves you from incurring late fees and avoids a reduction in the credit score.

 ATM cash withdrawals made via Credit Cards

Credit card issuers charge a cash advance fee as high as 3.5% of the amount withdrawn from the ATM via credit cards. Cardholders keep on incurring finance charges till they repay the entire amount withdrawn from ATMs.

One should avoid ATM cash withdrawals as much as possible or repay the withdrawn cash on a priority basis.

Tips for getting out of the credit debt trap

The best option to save yourself from credit card debt is to opt for EMI conversion if the credit card issuer is imposing higher interest rates by the day. Here are some alternative options that one can explore:

 # Credit card balance transfer: 

Credit card issuers offer balance transfer options to users wherein they can transfer their unpaid balance to another card issuer at a lower interest rate or no interest rate for 3 months (called a promotional interest period). This option is beneficial for those who can repay the entire balance in that period. But the card issuer starts imposing the financial charges as soon as this promotional period is over.

Some card issuers also allow the EMI option applied to the balance that has been transferred. This is helpful for those users who find it difficult to repay the entire transferred balance immediately.  

# Explore alternative loan options: 

To get out of the credit card debt trap, personal loans, gold loans and top-up home loans can be utilized for getting out of credit card debt traps. The lenders charge a lower interest rate for these loans than the rates charged on EMI conversions of unpaid balances of the credit card. So, one can opt for these alternative loan options to reduce their interest cost and get out of their debt trap sooner.

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