Credit cards are certainly useful during emergencies. They increase your purchasing power, give you rewards, and save you money from foreign transaction fees. As useful as they are, when used in a foolhardy fashion, it is a one-way ticket to drowning in debt and can hurt your credit score. If you are somebody who is frantically searching for best practices on ‘how to pay your credit card bill,’ then you have come to the right place. We have curated 7 simple ways for you to finish your credit card repayment.
Please note that there is no hard and fast rule to repaying credit card debt. These are some of the common ways, so before opting for them, do your research.
#1 Start with repayment of high-interest debts-
Credit card debt can be challenging as the average Indian credit card interest rate is 40%. It is imperative that you pay off debt with high-interest rates as your aggregate interest out-go decreases. Higher interest rate debts accumulate interest much quicker than ones with lower rates. You might be tempted to pay credit cards with short due dates, but this method can affect you in the long run.
#2 Balance transfer-
One way to pay credit card bills when you’re already in a bind is to transfer your dues from one card to another card. Experts observe that it gives a short relief from debts. The second bank you transfer to, permits 90 days for credit card repayment depending on your due amount. This way you can find more time to complete your credit card debt.
#3 Consider EMI as a credit card repayment option-
If you have a large amount accumulated on your credit card repayment, then you can speak with your bank and request them to convert the due amount into EMIs. EMIs can be useful to pay credit card bills as they don’t take a lump sum amount but smaller amounts monthly. Please note that banks do include a monthly interest for availing of the EMI option. Apart from this, they will require a processing fee as well.
#4 Consider opting for a gold loan-
This is also an efficient option when executed responsibly. As mentioned earlier, credit card debts have very high-interest rates, so you can opt for gold loans and pay off the debt by credit card first. Gold loans have relatively lower interest rates and processing fee, so you can pay more comfortably. This is especially useful if you are looking to finish the tenure within 1 or 2 years maximum. Here are some of the key features of gold loan and credit card tabulated for better understanding.
Gold loan
Loan against credit card
Loan amount - The loan amount given is generally quite high as it is based on a certain percentage of the market value of the gold assets pledged
Loan amount offered is usually within the credit card limit, though some banks may offer a higher amount
Interest rate - Interest rates are low since gold loans are secured loans usually starting at an average of 5.68%
Usually come at a higher interest rate averaging at 12%, since they aren’t backed by any asset
Tenure - Gold loans are short term and not offered for longer than 3 years
Personal loan on credit cards is generally offered for 24 months, though some banks may offer longer tenures
Rupeek offers interest rates at rates as low as 0.49% every month. If you are afraid of stepping out while opting for a gold loan during the pandemic, then you can opt for door-step gold loan services where highly-experienced and trained professionals will visit your house and conduct the KYC process and gold evaluation at your home. Another interesting option to explore is securing a credit card against gold. The Rupeek Quick feature allows you to get a credit line against gold pledged once, that you can use like a credit card. You can withdraw money whenever you require and pay interest only for the amount withdrawn.
#5 Explore your options
A key factor to credit card repayment is exploring all options available. If you are in a bind because you lost your job and you are in a pickle to meet your emergency expenses you can request guidance from financial advisors on anything from how to pay your credit card bills, to how to increase your CIBIL scores etc. It is best to seek professional advice as they know the consequences, terms and conditions of all available options, so you can stay cautious and not end up in a spiral.
#6 Opt for automatic deduction
Credit card repayment can be tricky for two main reasons, one, it means you need to do it manually every month, keep track of your billing cycles, coordinate with your agent etc. Secondly, it is difficult to cut down on other expenses, because now you don’t have as much money for recreational purposes. This is why automatic deduction is a better option as it reduces your burden of remembering repayment deadlines and avoids any kind of manual intervention.
#7 Consider paying more than the required amount
Banks accept payment that is more than the minimum amount as it reduces your overall interest out-go. So when you do have the money, you can do your credit card repayment in excess. This way your due-amount decreases gradually, which can keep you motivated throughout the process as credit card repayment is similar to pursuing an end goal.
#8 Keep a positive attitude
Credit card repayment can be overwhelming. It can be scary because it is very easy to slip into a debt trap. However, it is of vital importance to keep a positive mindset. Before you pay off debts, remember to maintain a tracker of how much you have paid, and when. Allocate a budget every month and set out an amount just to pay your credit card bills. It is going to be a difficult process, especially if you have a large due amount. Try some of the tips mentioned above and over time, surely you will be able to pay off your debt.
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