7 Ways to Pay your Huge Credit Card Debt

Most of the people realize it very late that they have crossed the limit of debt in their credit card. Spending that starts with small and unimportant things becomes severe with urgent and regular needs. Most of the decision to use credit card are impulsive. The urge to spend is a habit which grows with time and hurts you if you try to avoid it.

In my earlier post The most important thing you should know about your Credit Card , I talked about how interest component becomes so high that the major portion of your payment goes towards the payment of interest than principal. I faced this situation in my life and have seen my friends suffering from it too. Before I could see this clutter, I was so deep into the mess that it started to affect my health. I felt cheated but there was no one to blame but me.

The amount of interest charged on credit card is so high that you end up paying 30% to 50% in form of yearly interest. This is too big compared to 18% you pay on personal loan or even less in home loan. This leads to couple of options which you can use in order to take care of your Credit Card Debt.

1) First and foremost is taking a personal loan and paying your outstanding debt. You can do this either by taking money from your friends, family, or other relatives or by approaching the bank. There are many banks which are ready to give you personal loan with minimal documentation. There is no harm in specifying bank the purpose of the same and how you would utilize your salary in future.
2) At times your salary account statement is so bad that bank rejects the loan based on their risk assessment logic. In such case you need to take a loan from someone (friends or secondary market) and pay the dues on the card. You have to make sure that your account activity look good for atleast two to three months before you can approach the bank. You can then take money from bank and make payment to your friend.

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3) You can do balance transfer to your other card and escape interest payment for few months. There are some cards which either don’t charge interest for few months or ask for minimal one in case you do a balance transfer. I was able to do this with two cards from their three month interest free period and was able to pay my debt in six months. Only amount I had to pay was initial fee.
4) Talk with the bank in which you have a credit card to provide you the loan or convert your outstanding into an EMI amount. Banks are very much open to this because they have an opportunity to create extra business in both credit card and personal loans space.
5) If you have a home loan there is no harm in taking an extra loan in the form of house improvement loan. They are ready to give you a top up for the maintenance of your house.
6) Sometimes top up is available on your car loans too. Many a times if your history is good banks are more than willing to top up this amount. Try this; few people have knowledge of this option.
7) Ask for loan from your company. At times some companies do give option to their employees at minimal interest rate.

You need to work hard to manage things on your end. There is no point in paying huge interest when other options are available in the market. But most important part is what you should do once you have paid your credit card debt and have started the EMI’s on your personal loan. My suggestion is stop using card or use it responsibly. Make sure you pay the dues every month no matter what happens. If you have to borrow small amount of money than do that rather than carrying it forward. Much better option is to use your debit card and pay from your savings account. It is important to admit that you don’t have money than facing the consequences at the later stage.