Tired of Credit Card Debts? Here Are the Ways to Minimize Your Credit Card Debts

Credit cards can be a great convenience and have numerous benefits for the user. Besides being convenient with better consumer protection, credit cards are favorable to use for shop things online, buying large dollar items, for travel, and some credit cards don’t even impose a foreign transaction fee. But on being a little impetuous, they can also lead you to serious financial nightmares resulting in bad credit. Well, we understand if you prefer solving your debt challenges on your own, as you don’t want to share your finances and issues related to them with anyone. But there are some real useful ideas and ways to minimize your credit card debts:

1. Transform payment to EMIs

If you finding it hard to repay your credit card’s outstanding amount, you can request your creditors or your bank to transform your credit card outstanding amount to monthly EMIs. However, your creditors might charge 2-3% of monthly interest for enabling EMI facility along with a processing fee around 1-2 % of outstanding amount.

2. Negotiate with your creditors for lower interest rates

Always remember, lower interest rates make it convenient to pay off debt. Usually, the users never call their creditors to request for lower interest rates which makes it tough to eliminate debt leading to increased costs. Lower interest rates means when you make less of each monthly payment, it gets consumed by accumulated interest charges. Thus you pay off the owed original debt much faster.

3. Opt for balance transfer facility

So, if you’re already dealing with bad debt cycle, the idea of balance transfer or transferring your dues from one card to another would be a wise option. So, this option is all about transferring all your balance from one card to another card or multiple cards, or from multiple cards to one single card which is one of the best ways to minimize credit card debt. However, this is a temporary solution from debts. Now, the second bank allows you a credit-free time which is about 90 days to make convenient repayment of your outstanding amount. Once, the credit-free time ends, regular interest will be imposed on the card holder.

4. Payoff debts with higher interest rate first

This is another technique that people usually forget to think about. Clearly, when you have debts on multiple cards, you pay off the one with shorter due date first. But this is a very wrong technique. You should actually pay off the debts on the card that asks for highest interest rate first. In this process, you minimize your sum of interest outgo since the pending dues with highest interest rates accrue interest faster.

5. Always pay more than minimum amount

Many card users tend to pay exact the minimum amounts that results in mounting debts causing many borrowers to get trapped in unlimited debt spirals. Credit cards come with very high interest rates, hence paying just the minimum amount maximizes you outstanding amount at an exponential rate according to the outstanding amount.

6. Keep a track of your billing cycle

Another way to minimize credit card debt is knowing your billing cycle to take maximum advantage of a credit-free time period. If your card offers you a 30 days of credit free time, then it doesn’t start from the purchased date rather the first day of monthly billing cycle. Hence, if your monthly billing starts from 10^th of every month, so any purchase you do on the 9^th of the month gives you one day of interest-free credit casement and any purchase done on 11^th of the month will provide you 59 days of interest-free holiday.

7. Enable automatic payment facility

Most of the credit cards come with higher interest rate and late payment fee, hence enabling automatic payment facility is highly recommended to help you never miss your bill payments on time. In this method, your amount of the bill gets deducted from your account automatically without seeking your manual intervention and without making you stress about missing repayment deadlines even when you’re travelling or do not have any possible access to your bank.

8. Sort out your debts

After requesting to your creditors for requesting lower interest rates, you have your rates as low as possible now. The next step is to organize or sort out your debts you need to pay off, starting from the highest APR to lowest APR. You need to pay your highest APR debts first as they cost you more money, to save more money on total interest charges. 

9. Pay off debts one by one

Once you are done with first highest APR debt, move to second highest APR debt. Paying out in chunks and continuing down the line until you run out every balance you owe. With every debt, you finish, you unlock more cash to use towards paying out the next debt.

10. Limit the numbers of credit cards you use

You might be getting numerous offers from different banks, sales executive and creditors about the irresistible and fascinating offers on countless calls and innumerable mails, but the fact is no matter how fascinating they are, credit cards are huge financial accessories. And moreover, opting for multiple credit cards, maximizes your risk of getting tapped in bad debt by simply missing the deadlines. Hence, it is better to limit the number of credit cards you using to minimize the credit card debts in the first place which is the best way to reduce unpaid debts.