A job loss has left a Reddit user struggling with Rs 1.2 lakh in credit card debt after relying on the card to cover everyday expenses, including food. With monthly interest payments of Rs 4,000 to Rs 5,000 adding to the financial strain, the user is now considering a personal loan to clear the outstanding balance and repay the borrowed amount over the next 12 months.
The Reddit user said they lost their job in a competitive market and turned to a credit card to cover everyday expenses, “I made a dumb mistake and now have to face the consequences badly. For context, I got laid off last year from my high paying job due to a market shift and had nothing to manage expenses, hence I started using a credit card for food/expenses.
“My card has a limit of 1.5L and I managed to use 1.2L as of today. I've been paying 4-5K as interest for the last few months, as I'm unable to settle the 1.2L as a whole.”
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“Now I'm wondering if I should get a loan to clear the card and pay back the loan in like 12 months because the card interest is way higher than the loan. What's the best way to clear this debt?
“Right now I'm earning very little, 25k/month, but will soon be getting at least 80-85K/month by the end of the year (guaranteed). Additionally, I've not missed any minimum payment amount yet and I have cleared 100% on time payments so far with a CRED score of 789.”
Made a dumb mistake and facing consequences
by u/IndependenceLeft2169 in personalfinanceindia
Reacting to the post, a user wrote, “I guess taking a loan to clear a credit card loan looks safer, as in a personal loan you will pay 18-24% interest per whereas credit card charges 36-48%.”
Another shared, “Sell off some assets - gold / car / bike / laptop. If you had a high paying job, you definitely would have something worth selling.”
“I would take a lower interest personal loan and kill the credit card debt completely! Paying 4-5k every month just in interest is brutal. But once you clear it, stop using that card until your income stabilises,” a comment read.
An individual stated, “A personal loan, i.e., a credit card, will snowball to around 60% interest if not paid, so simply repay the amount you have and lower your total amount. A credit card is used for emergencies, not to fulfil one's needs.”
Another mentioned, “Paying from an overdraft account is the best in your scenario. Flexible payments can be made anytime with no penalty and a much lower interest rate (1% per month). Didn't your bank give you the option to open an overdraft account when you had your job?”
One more added, “Switching from high interest debt to low interest is logical. The key thing is discipline in paying off and sticking to good money habits.”
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He also shared that their CRED credit score was once above 830 but later dropped because of high usage of the card.
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