Know How to Get out of Your Credit Card Debt Trap - Financing Panda: Latest News on Finance, Loan, Business


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Wednesday, August 15, 2018

Know How to Get out of Your Credit Card Debt Trap

When it comes to seeking online credit cards, Indians have been traditionally known as averse to it, but the picture seems to be changing. The recent data from the Reserve Bank of India (RBI) shows that the total outstanding on credit cards is increasing. Yes, the credit card outstanding has shot up by 38% in the last two years.

Although it’s good news for the Indian credit card companies, it may lead average credit card owners to fall into a debt trap because they may get savvy about them. Thus, in the same context, let’s provide you some time-tested methods to keep off the debt trap easily.

Always Pay your Dues Each Month

Always know that if you keep revolving the outstanding debt on even your best credit cards, you will end up paying huge as the interest rate could be as high as 40%. It’s the worst type of the debt trap that you imagine to land in. However, if you are paying the full amount by the due date, credit cards will help you cover needs super easy!

You Need not Carry too Many Cards

Did you know that you can miss clearing all payments due if you have many cards at your disposal? Yes, that’s possible! People love to flaunt many credit cards and just to impress others; they tend to make huge purchases! Thus, when the due date comes, it becomes problematic for them to clear all at once, and may fall into a debt trap! Hence, avoid having too many online credit cards!

Convert your Heavy Purchases into EMIs

When the credit card companies have given you the option to convert your large purchases into easy EMIs and never feel burdened, why not avail the advantage? Yes, you can do it! Converting a purchase into EMIs help you never feel the stress of clearing all at once and you may spread the cost into months and pay easily!

Avail a Loan and Repay your Dues

If you don’t have prior savings or another financial backup to clear an interest mounting debt and other EMIs, it would be advisable to opt for a personal loan and pay it in one go! Why? It’s because it’s always better to repay one EMI for a personal loan than paying too many at a time!

Utilize Peer-to-Peer (P2P) Lending Platforms

Another option to repay your credit card outstanding is turning to a P2P platform. If you are a salaried employee with a take-home income between Rs. 30,000 to Rs. 40,000, and if your debt-to-income ratio is surging, you can avail a loan at 18-22 interest. The only disadvantage of applying for a loan to clear your credit card debt is that despite being eligible for it, a lender needs to be physically present. It is mandatory at that point who may be interested in lending you money to a borrower of your type.

The Bottom Line

Always know that an online credit card is an effective financial product to help you cover your urgent financial needs, and must be used only for emergency purposes. If you don’t know how to use it well, you can land in a debt trap and then would need to implement the discussed methods to ward off all issues. All the best!    

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