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6 ways to deal with mounting Credit Card Debt

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credit card debtHaving a credit has shifted from being a fashion statement to a necessity these days. In fact, it’s not a question of whether or not to have a credit card, it’s about how many. Having multiple cards will also give you the flexibility of usage. When the balance in one card is exhausted, another comes into play. Credit limit of these cards has also increased by a huge margin. But, in the process there are also chances that there is enough amount of debt sitting on you. It’s better than you start dealing with it now rather than wait for it to dance. Let’s look at 6 ways to deal with credit card debt.

Take a loan

Pretty simple – Take a loan to clear another. Before taking any loan, make sure you understand the interest rate on your credit cards. Not all the credit card companies inform you of the interest rates before hand. You need to enquire about it. Typical interest rates would be around 13-20% p.a. There are fixed as well as variable rate options for credit cards.

Now that you know the interest rate on your credit card, you will have to find a loan with a lower interest rate to clear the existing balance. Personal loans are usually costlier. Loan against FD, insurance, PPF, etc can be considered for this purpose. If you have already managed to get a credit card with the lowest rate, it would be difficult for you to get a loan with interest rate lower than this. In such as case, you might have to approach your friends/relatives to seek a loan with lower interest rate.

Transfer balance to another card

Credit cards allow you to transfer your credit card balance to another card. The outstanding balance can be serviced through EMI’s of various tenures as specified by the new card. By transferring the balance, you will save interest as well as get some time to arrange funds to clear your debt. While transferring, make sure that the interest rate on the new card is lower than your old one. Also, do not keep using this option repeatedly. Your first priority should be to clear the debt as soon as possible.

Approach credit counselling centres

Credit counselling centres have been set up in India for the very purpose to help those dealing with debt on credit cards and other loans. They would analyze your current situation and provide you with possible solutions to get out of debt. If needed, they also negotiate on your behalf with the credit card providing organization. They would also educate you on various aspects of credit and also ways to build your credit score. Abhay counseling, Credit Sudhaar, Disha counseling are examples of credit counselling centres in India.

Liquidate existing investments to clear it

If you are fed up of searching for alternatives on this, you have to consider liquidating your investments to clear this mess. You can consider options such as breaking an FD or redeeming your mutual fund units to fund this. This will give you peace of mind that you are not servicing any debt.

Pay minimum amount every month

By default, every credit card gives you this option once you have delayed your credit card payment. You need to pay a minimum monthly amount to clear the lump sum. However, it is not such a wise option to go for. It gets you into a debt trap where you keep paying the amount but still the debt remains for a long time. After the entire period, you would realize that you have paid 2-3 times the actual amount. However, you can start doing this but also simultaneously look for funds to clear this as soon as possible.

Settlement option

This should be the final option that you should be considering. You can speak to your credit card company and strike a deal for clearing the debt. They will reduce the outstanding amount to be paid and ask you to pay the balance as a lump sum now. Though you would gain in this regard, it will affect your credit score and lower your chances of securing future loans.


Though there are options to clear mounting credit card debt, best thing to do would be to have control over your spending through credit cards. Use only one credit card, if possible. Track your spending regularly. If you do not have time to regulate or plan your spending, it’s better to avoid using credit cards and look at other options.

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