According to a recent report, credit card debt in the country between 2015 and 2019 has increased rapidly, averaging around 27% annually. To this end, with the average credit card interest rate around 41%, failure to manage the debt ensuing from such card’s usage can be quite damaging to one’s financial health.
Therefore, it is imperative to know the ways via which you can manage your credit card bill payments and avoid falling into a debt trap.
6 tips to manage credit card outstanding efficiently
- Change your spending habit
The best way to avoid the trap of high credit card interest rate is to alter your spending habit. You can create a budget for your monthly expenses and spend accordingly. It will help you to limit your expenses and keep your credit utilisation ratio lower. A point to note here is that, high credit utilisation ratio can also negatively affect your CIBIL score.
- Convert bills into EMIs
In case you are struggling to pay the bills on time, thereby increasing your total debt, you can talk to your card issuer and opt for the EMI facility. It will streamline your repayment process, and assist you to clear your debt faster. While you can enjoy interest-free EMIs up to a certain tenure, you will be interest eventually. However, this interest amount is comparatively lower than what you will be charged for defaulting regular repayments.
- Utilise the interest-free period
Every credit card has an interest free period of 45-50 days, and if you can complete your payment within that period, you can save yourself from paying any extra amount over your bill amount.
- Pay off the ones with the highest interest rate first
To mitigate your credit card debt, you can choose to pay the ones with a higher interest rate on priority. Individuals often make the mistake of repaying the bills with low outstanding first, consequently letting interest gather on other debts. Since interest on late payments is considerable, it is ideal to repay the ones that charge such a higher rate of interest at the very onset.
- Paying more than the minimum amount
Credit card users often follow the practice of paying just the minimum amount due, effectively falling into a debt spiral that is not easy to get out of. Therefore, instead of paying just the minimum due amount; repay something extra to reduce your total debt. There are many convenient options to pay credit card bills, explore them.
- Know the billing cycle
A billing cycle is the 30 day’s period during which the credit card company records all your transactions, and sends you a statement accordingly. As a user, you must be aware of this cycle, as it will help you to reap the benefits of interest-free period and plan your repayment better.
Since credit card interest rates are usually high, it is ideal to monitor your credit card debt regularly to avoid any issues. You can do so easily via the official website or mobile application of your respective issuer. NBFCs like Bajaj Finserv allow their customers to access every detail of their Bajaj Finserv RBL Bank SuperCard via mobile applications and repay their bills as well. Additionally, the competitive interest rate and a host of other customer-friendly features help individuals manage their financial requirements without any issues.
Furthermore, the company also provide pre-approved offers, which streamline the application process and save time. These offers are available on financial products like credit cards, personal loans, business loans, etc. You can quickly check your pre-approved offer by submitting your essential contact details.
Credit cards are an excellent financial tool if used correctly. Otherwise, the high credit card interest rate can become a one-way ticket into a debt trap. You can follow the tips mentioned above to manage and repay your credit card debts efficiently and refrain from mounting dues.
While you may be inclined to stick with your debit card or carry around cash, using a credit card has its own benefits. In fact, with a credit card, you can both save on your spending and gain from a better purchasing experience. While being too dependent on your credit card and using more than you can repay can lead you to debt, prudent use of this tool can improve your financial health. So, if you are wondering if you should go for credit card apply, take a look at its benefits to make the right choice.
Convenience of credit
One of the major perks a credit card brings to the table is that it is universally accepted. This isn’t always true for your debit card. Additionally, credit cards give you increased purchasing power, allowing you to make big-ticket purchases without dipping into your savings. However, be wise when using a credit card as you alone are responsible for its repayment.
Financial security and fraud protection
Having your debit card skimmed, stolen or subject to fraudulent transactions is money stolen right out of your account. This however, is not the case with credit card, and due to that fact lenders provide you with a lot more security when it comes to credit cards. Some lenders such as Bajaj Finserv let you disable your credit card from your smartphone if you ever suspect fraud. Additionally, you also enjoy financial security in the instance that you’ve paid for a service but it wasn’t carried out. Disputing transactions is extremely simple and in most cases the transaction is reversed as soon as you report it.
Rewarding features to help you save
The reward system offered by credit cards is a favourite among consumers simply because of the value it adds to the purchasing experience. Some issuers let you earn points based on the transaction amount or the number of transactions and these points can be then redeemed for exclusive products and discounts. However, it doesn’t stop there. Certain issuers have collaborations with brands and offer additional exclusive deals on purchases made at those stores. For example, Bajaj Finserv RBL Bank SuperCard allows you to save up to Rs.55,000 annually.
Increase in credit score
This benefit of a credit card is especially important to those with a low credit score or without a credit history altogether. A factor that determines your CIBIL score is your repayment behaviour and credit history, and so, you can use a credit card for this purpose. Making consistent credit card bill payments will add points to your credit score and you’ll see an increase in no time! This will help you secure credit in the future on favourable terms.
These are the benefits that speak for the popularity of credit cards. Besides these, several issuers also give you access to exclusive offers through their various collaborations and this can greatly impact your quality of life for the better. This can be in the form of airport lounge access, special reservations and in some cases, even complimentary amenities. You can enjoy all of this and more when you pick the right issuer and one such option is the Bajaj Finserv RBL Bank SuperCard.
The credit card offers on the SuperCard are some of the best in the market on purchases made for travel, food, entertainment and even utilities. You get to enjoy special discounts, cashback offers and all your purchases earn you reward points, which can add even more value to your future purchases. Additionally, in emergencies you can get an interest-free loan for 90 days on your credit limit and even withdraw interest-free cash from credit card for up to 50 days from any ATM. To apply for this credit card online, all you need to do is check your pre-approved offer and view a customised deal and enjoy instant approval.
With spending power that comes with credit cards, it is easy to be trapped in the vicious cycle of debt if one is not cautious. The situation becomes dire when the debt is spread over multiple cards. The situation can be tackled easily through personal loans. These unsecured loans have minimal documentation and no collateral can be used to mitigate immediate financial crunches at feasible interest rates.
Let’s delve further into personal loans and how they can be used to pay off credit card bills.
Personal loans: A glance
With minimal personal loan documents and no collateral submission, personal loans are the most accessible credit options for all regardless of self-employed or salaried applicants. Being unsecured, lenders use stringent criteria for loan qualification. Most lenders rely on the credit scores by CIBIL to determine the eligibility of the applicant. Applicants should note that the eligibility criteria vary from lender to lender. Applicants can verify their eligibility using a personal loan eligibility calculator.
Surmised below are the eligibility criteria for Fullerton India.
|Credit score||750 or above||750 or above|
|Age limits||21-60||21- 60|
|ITR||Required while submitting documents||Applicants should have income tax returns filed for the past 2 or 3 years.|
|Income||A minimum monthly income of Rs 25,000 for applicants from Delhi or Mumbai and Rs 20,000 for other applicants.||A minimum profitable income after-tax which should be a viable amount in the respective industry|
|Work Experience||One year||One year|
How do personal loans help to tackle the overdue of a credit card?
Although a higher spending one can earn points on a credit card, a defaulted repayment can negatively affect the credit score. Especially if you possess multiple cards and the balance is split across, it would be advisable to pay off the due as soon as possible to avoid hefty charges.
The most prominent method to handle credit overdue is by applying for a personal loan. With booming digitization, most lenders provide a personal loan online apply option through their websites or applications, making the process hassle-free.
Let’s check out the benefits of opting a personal loan:
- Lower interest rates
The interest rates on an outstanding due of a credit card multiplies with each day of delayed payment and is much higher than personal loan interest rates. By adopting personal loans with lower interest rates, you can save your funds from exhausting. One of the easiest ways to compare this fact is using the annual percentage rate of the two choices. A choice with a lower annual percentage rate helps you save better.
- Consolidating the overdue
If you are a holder of multiple cards, with dues spread across, the best way to combine the debt is to opt for personal loans. With just one monthly repayment at lower interest rates, one can handle their finances better.
Personal loans are a popular credit tool among the masses because of the flexibility it offers. It allows the applicant to choose their tenure based on their financial capacity to repay the EMIs. Such flexibility is not available with credit cards.
- Enhancing credit score
Credit card dues can reduce the credit score of the cardholder. By opting a flexible personal loan option, one can not only pay their dues but also improve their credit scores.
Personal loans are often saviours, especially when one drifts in a rough tide of dues. By choosing the right lenders with best interest rates, one can not only pay off their dues but also improve their credit scores.