The usage of Credit Cards is on a steady rise in India. Be it for online shopping, daily expenses, or retail shopping; Credit Cards are simplifying cashless transactions causing a rapid growth in the use of cards. But this flexibility and ease can sometimes lead to a false sense of financial security, and you might end up spending more than you can afford. In such a situation, if you make payment for only the minimum amount due, you might very soon end up in a debt trap. You may accumulate more debt than you pay within a few months.
Thus it is recommended to use your Credit Card judiciously only for the amount that you can repay effortlessly every month.
If you carefully check your Credit Card Statement, there are two types of amounts overdue mentioned i.e., the total amount due and the minimum amount due. While the total amount due specifies the entire liability you owe towards the Credit Card company, the minimum due is the amount you must pay to avoid penal charges.
Minimum due is usually 5% or 10% of the total due and is an option available to customers facing a temporary cash crunch. But if you make it a habit to pay the minimum due, the interest will keep adding on the outstanding amount. The APR against Credit Cards can go up to 51%, creating a precarious situation. You must, therefore, try to pay as much amount as possible every month towards your Credit Card dues and save yourself from a debt trap. Another useful strategy that you can use is to apply for a Personal Loan and consolidate your debts.
Various financial institutions in India offer the facility of personal loans for their customers. Nowadays, many financial institutions, online as well as retail, also offer a Personal Loan on Aadhar Card. As these loans are unsecured in nature, the money can be used for any financial requirements. Moreover, with the interest rates for Personal Loans starting from as low as 10.99%, they are amongst the most affordable forms of credit. When you compare the interest rate of a Personal Loan (10.99% onwards) with that of a Credit Card (48% onwards), the affordability of Personal Loans will become clear to you.
Although a Personal Loan is still a form of a loan requiring you to pay regular EMIs, the lower interest rates and extended repayment tenor make sure that the burden on your finances is reduced significantly.
The process of paying off your Credit Card Debt with a Personal Loan is pretty straightforward. If you have a good Credit Score and Credit Profile, your application for a Personal Loan would be approved easily. Once the amount is credited in your bank account, make the payment towards all your Credit Cards in full. Make sure that you take into account the expenses you have incurred in the current month also while making the payment. In the next billing cycle, check the credit entry for the amount. From now on, use your Credit Card judiciously and make payment for the amount due in full every month.
In addition to the obvious benefit of reducing your financial burden by lowering the interest cost, Applying for a Personal Loan to repay Credit Card debt offers you several other benefits as well, such as: –
Using a Personal Loan to repay Credit Card debts can indeed prove to be a highly beneficial financial decision. Though, before you apply for a Personal Loan; you must undertake thorough research to find out the best offer for your profile. It would help you maximize the benefits you can avail of from availing a loan.
Also Read: 10 Reasons to Choose Personal Loans in India
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