Credit card has become a huge expense in shopping, this is a smart way to get out of the debt trap

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Photo: File This is the smart way to get out of the credit card debt trap

Credit Card Payment: Credit card can prove to be a boon for us, but only when it is used wisely. Often we get tempted to see anything in the market and buy it quickly whether we have money or not, because we have our own credit card, on which we get a limit of Rs 50,000 to lakhs. If you have swiped credit cards impulsively, you will be under pressure to clear huge bills and dues.

Now the question arises that how will you deal with this debt? You will have the option of accepting the Equated Monthly Installment (EMI) offers of the credit card. Apart from this, you can also pay a fixed amount and make installments for the next month for the outstanding bill. However, both of these options are not good.

So how can you reduce your debt burden? Especially at such a time when you may be facing problems like salary cut or job loss during the Corona period, this loan can prove to be difficult for you.

Redeem your cashback and reward points

You should redeem your reward points if your credit card issuing bank hasn’t generated the bill yet. Some banks allow you to pay your credit card bill using your reward points. If your credit card bill has already been generated, any request made by you will come in the next billing cycle only. This will delay the relief you get.

Credit card EMI option

Credit card EMI is one of the most easily available options for paying off credit card dues. The interest charged on these ranges from 15 to 22 per cent. Also, there are things like high prepayment cost with it. Transferring the outstanding payment to a credit card that has the lowest interest rate and the longest interest-free period can also be used as an option. You can also convert your outstanding to EMI by calling the customer care of your bank.

loan top-up

You can also ask for a top-up on your existing home loan to repay your loan. But, it has its limits. For example, if you take a top up loan of Rs 1 lakh and its tenure is 15 years, then even at an interest rate as low as 7.5 per cent, you will have to pay around Rs 70,000 towards interest. In such a situation, it is necessary to dispose of this top-up properly. It would be better to set aside some money every month and try to repay the top-up amount in full within a year. This will save you a lot of interest. But, these loans can be availed only by those who are already paying EMIs on the home loan.

loan against investment

You can avail a top-up or personal loan against fixed deposits, mutual funds, life insurance policies and even gold. These can keep your cost of funding low. These loans usually come in the form of an overdraft of about a year. Banks are increasingly giving these digitally.

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