Credit card debt consolidation: 5 tricks to get out of debt trap
Have you ever fallen to the temptation of using your credit card more often than you should? Have you felt trapped afterwards on realising the damage done? So, what do you do next? These are common questions that most credit card users ask. Overspending on credit cards is the new standard. Feeling trapped afterwards is the new norm. Now, credit card debt consolidation can be a tricky business. But help is at hand to bail you out of such situations. Wondering how to consolidate credit card debt on your own? Here are a few tricks to try.
5 ways to consolidate your credit card debt
1. Personal loan to the rescue
A personal loan is perhaps the best choice to consolidate credit card debt. The rate of interest on credit card debt varies from 30% to 40%. But for personal loans it is between 18% and 24%. So, there are significant savings in interest if you opt for a personal loan to pay your credit card bills. Besides, say you have debts on multiple credit cards. A personal loan can help you manage it better. You need not remember the different due dates for paying debts accrued on each card. Simply consolidate your credit card dues into one payment.
2. Choose loans against your life insurance policy
Did you know you could take a loan against your life insurance policy? You can use this to pay off your credit card dues. The advantage of taking such a loan is the lower interest rate of 9%. Note that the loan amount will depend on the policy’s surrender value. It is applicable only to endowment policies. The minimum tenure for the loan is six months.
3. Balance transfer on EMI card
This is a fresh option that you can explore. Apply for a new EMI card offered by various lenders. Then opt for the balance transfer mode. This way, you can transfer all your existing credit card dues to the new card. You can then manage the debts better as all of them are clubbed under one card. Besides, you have the option of choosing the number of EMIs yourself. Pay off the loan in three, six, nine, 12, or 24 months.
4. Let the experts do it for you
Perhaps you think handling the debt on your own is too much to ask. No problem. You can always seek expert advice. Banks nowadays offer a credit counselling service for stressed individuals and organisations. There are banks that offer counselling with special centres to help you formulate a debt repayment plan. Services are free of charge and the centres function under the guidelines laid down by the Reserve Bank of India. Alternatively, there are private credit counsellors you can visit. But they will charge a fee for their expert advice.
Choose any of these strategies to retire your credit card dues. Just remember you have to stick to a strict plan to get out of debt. Selecting the strategy is just the beginning. Ensure that the plan has a fixed timeframe. Then commit yourself wholeheartedly to stick to the plan.