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.