Expert Advice For Cutting Credit Card Debt - IndianMoney.com

 

 

About IndianMoney.com

IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products
 

Expert Advice For Cutting Credit Card Debt

You want anything. You just swipe your credit card. This has been going on a while. Now the borrowing has gone beyond limits. You’re stuck in a hole.

 “If you find yourself in a hole, the first thing to do is stop digging.”
                                                                                           

                                                                                           Will Rogers

How are you going to crawl out of the hole you have dug yourself?

Use the balance transfer :

You can transfer your credit card dues (Outstanding balance) from the credit card in your bank to a new credit card in another bank. The new bank offers you two types of balance transfers.

• Fixed duration balance transfer.

• Lifetime duration balance transfer. 

So what is a fixed duration balance transfer?

Your bank allows you to transfer your credit card dues from your credit card to a new credit card in a different bank. The new bank gives you a limited time say 3- 12 months to repay your credit card dues.

Your new bank sweetens the deal charging you a rate of only 8-10% a year on your outstanding credit card dues on the new card. 

The actual interest rates on a credit card due (Outstanding balance) can be as high as 30% a year.

Here’s the catch:

You have to make the repayments on the new credit card in time. If you default/delay or fall back on your payments then the bank charges you the usual rate of interest (above 30%).

The lifetime duration balance transfer:

The new bank gives you a lifetime (several years) to repay your old credit card dues in another bank. For the added years (you get many years to repay the old credit card dues) the new bank charges you a high rate of interest (15-25% rate of interest a year).

There is also a processing fee of 1-2% of the outstanding credit card dues (The dues on your old credit card) charged by the new bank.

The new bank makes a DD (Demand draft) in favor of your old bank to the amount of your outstanding credit card dues in the old bank and sends it to your address. 

The EMI route:
 

You can opt for the EMI option where your bank allows you to convert your credit card dues (Outstanding balance) into EMI’s. The rates are much lower at 1.5-2 % a month instead of the usual 3% a month.

You have to make your repayments (EMI payments) on time, otherwise the bank will charge you the usual rate of over 3% a month.

Avail a personal loan: 

Your bank charges you a very high rate of interest on your credit card outstanding dues (over 35% a year in some cases).It would be wise to avail a personal loan from a bank and repay your outstanding credit card dues.

The interest on a personal loan can be around 14-20% a year. You do not need to give a reason to the bank (State the use of the loan) when you avail it from the bank. You then pay back the personal loan at this lower rate of interest (14-20%) rather than over 30% on your credit card outstanding dues.

This is a very convenient way to convert high interest debt to low interest debt.
You can put all these methods to use and retire the debt on your credit card.

For Free Advice Give Missed Call:

 

 

Things to Remember When Using Your Credit Card - IndianMoney.com

 

 






About IndianMoney.com : 

IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.

  

Things to remember when using your credit card

 

The New Year is upon you. Time to bring out your shopping list. Oh… I remember that beautiful purse in the fancy store across the road. Thought of gifting my brother a new laptop. Worse… My son was fighting for the latest play station.

Time to bring out the credit card.

The last minute trick:

Remember the money in the credit card is not yours .It is borrowed. It has to be repaid with very high interest. At the beginning of the month there are always purchases to make. The money in the credit card looks plenty.

Postpone your purchases to the end of the month (The last minute trick).How does this help?

Money is always in shortage at the end of the month .You will buy only what you truly need if you postpone your purchases to the end of the month. All fancy and unnecessary purchases can be avoided. Remember the fancy purse and the playstation.

The credit card charges you a high interest:

Remember : The interest rate can be as high as 2-3.5% a month which equals (25-40% a year).

In addition there could be a late payment fee. You have to pay the interest on the amount outstanding. Choose a credit card which has low interest rates and penalty fees and other charges.

You are not charged any interest if you make your payments within the billing cycle. (Generally 1 month) .You are given an additional 15-20 days (grace period) in case you miss this deadline.

Remember the billing cycle:

Your credit card has a billing cycle (usually on the first day of each month). The billing cycle is of a month. An additional 20 days called the grace period is given.

If you make the payment for the item (laptop) you purchased within the billing cycle and the grace period (30 days + 15-20 days) you are not charged any interest.

But do you really get 50 odd days to make the payments for the new smart phone or laptop you purchased with the credit card.

If you purchase a laptop of INR 30000 using your credit card on 15th May at a monthly interest of 3%…Do you have 50 days (or till June 30th to pay back the amount).

Your billing cycle is presented to you on June 1st .

So how is your daily interest rate calculated?

You have purchased the laptop on : 15th May

Your billing cycle is on : 1st June.

Your daily interest rate is: 

= Outstanding amount * rate of interest (monthly) * number of days

= (INR 30000) * (0.03) * ((18/365) * 12) = INR 533.

If you miss the due date of 1st June (the end of your billing cycle) you are given an additional 15-20 days as a grace period.(say June 20th) 

If you miss this deadline then you will be charged at interest of INR 533.There might also be a late payment fee in addition to this interest charge.

Remember: The interest is charged from the date of purchase of the laptop and not at the beginning of the month.

The credit card is not a simple piece of plastic. It has to be used judiciously otherwise it will lead you into a debt trap.

For Free Advice Give Missed Call: