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Are You In Credit Card Debt? 5 Ways To Get Out Of It
We have all been there, done that. Credit cards make it easy for us to shop online thereby increasing our debt slowly but steadily. It requires a lot of self control otherwise you can easily get into the debt trap. Today, we will discuss 5 ways to get out of it for good.
Most investors fail to use their credit cards the right way leading to a mountain of debt that they later find difficult to pay off. A lot of them end up going for credit card debt settlement which takes the burden off their shoulders, however it negatively effects their credit score. A black mark on the credit score reduces your chances of getting a bank loan in the future.
Method 1 - Breaking investments
The first method in the list is breaking your investments in order to settle the credit card debt. A lot of account holders have money in their fixed deposits that can be used to pay off the debt. Most people however keep rolling their credit card debt instead leading to a higher payment of interest and a negative credit score. Ignorance is the root cause here. So wise up and use the money in your FDs to clear off your debt at the earliest.
Method 2 - Part Payments
In case you do not have sufficient funds in your bank account or in your fixed deposit, then this method is for you. Visit your branch office and discuss about the possibility of part payments. It is not enough to pay the minimum amount every month because that will simply save you form the penalty, the hefty interest is going to keep on adding making sure that you never get out of debt.
Do some rough calculation and start paying your debt in 4-5 installments. This means that you are suppose to deposit a certain lump sum amount every month along with the minimum balance that is due and the interest amount. This way you will be effectively debt free within a period of 4-5 months.
Method 3 - Loan from friends / family
If neither method 1 nor method 2 is working out for you, then it is time to ask for help from your friends and family members. It might be difficult for a single person to loan you out the entire amount, however if more than one friend or family member chips in, that mountain of debt can be settled pretty quickly and easily. You can then slowly pay your friends and family member at your convenience. Another benefit of going this route is that there is no interest to be paid to your friends and family.
Sometimes friends and relatives are hesitant to loan out money to one another due to the fact that it becomes difficult to ask back for the money. This creates an awkward situation. This is where you have to reassure your friends and family members that you are going to come out clean. Otherwise the best this to avoid a sour relation is to pay some interest on the amount that you are asking to borrow. It may not be as high as the going market rate, but can be some where in the middle.
Several banks offer the facility of converting your credit card debt into EMI options. What this means is that you can pay your credit card debt in a tenure of 3/6/9/12/24 months thereby reducing your burden. This facility is provided by almost all the major private and public sector banks of India. The rate of interest on the loan will come anywhere between 13-18% depending on your negotiation power and your credibility.
Credit card balance transfer
Credit card balance transfer option will allow you to switch your old credit card for a new credit card. The new credit card will pay itself for your old credit card. Some of the benefits of the old credit card may be carried forward to the new credit card depending on the terms and conditions of the bank in question. SBI bank also provides a 0% interest free period of upto 60 days to some clients. It is to be noted here that this is a temporary situation and that you are advised to find a more permanent solution during the grace period.
The best solution for you however is to avoid the problem all together. This means that it is wise to stay away from credit card debt as much as possible by exercising some control over your spending habits.