How To Reduce Credit Card Interest When You Can't Pay In Full? Here's A 5-Point Guide
Credit Card Interest: One strategy to avoid interest is to pay off the total credit card outstanding every month. Making on-time payments on all bills is the first solution.
Credit cards have become crucial financial tools these days due to the enormous flexibility and convenience they offer. However, unrestricted spending or too much dependence on credit cards for regular expenses may lead to a debt trap.
Account holders often fall prey to a debt pile as the cards offer multiple benefits like discounts on shopping, reward points, exclusive deals on top brands and movie deals, among others.
All credit card users are mandated to pay the credit card bills within the due date. Credit card defaults many lead to higher interest charges and additional fees, while impacting the overall credit score.
A few simple steps include paying more than the minimum amount due each month, making multiple payments and looking into debt consolidation loans or balance transfers. Here are a few simple ways one can follow:
How to reduce credit card interest? Here's a five-point guide
1. Make full payment every month
One strategy to avoid interest is to pay off the total credit card outstanding every month. Making on-time payments on all of bills indicates to lenders that one is a dependable borrower. It could be beneficial to set up electronic reminders or automated payments.
2. Pay more than the minimum amount
Even if one is unable to pay the entire amount owed, making a larger payment than the minimum required can assist in lowering the overall interest amount. The minimum payment is usually only 2-5% of the total credit card outstanding. Making additional payments lowers the interest that is accrued on the unpaid balance and reduces it more quickly.
3. Opt for balance transfer
A temporary solution could be to move the credit card debt to a new card with a lower interest rate. This enables one to settle your debt without incurring further interest. Many credit cards also offer a balance transfer facility without additional charges during a promotional period. One can explore such options to reduce overall cost. However, be cautious to clear the balance transfer EMIs without any default.
4. Ask for lower interest rate
Experts advise that one can contact the bank or credit card issuer to discuss the financial position. One can request to work out a feasible repayment plan at a reduced interest rate.
5. Convert outstanding amount to EMI
Several credit card issuers also allow converting the total outstanding to Equated Monthly Instalments (EMIs). This will help in clearing the total credit card outstanding by paying a small amount every month. This facility helps to manage debt over a predetermined time period.
To conclude, credit card bills can lead to a debt trap. One can restore financial stability even if one is unable to make the full credit card payment by taking a few proactive measures.
