Credit card dues have been broadly seen as the main reason why individuals often end up with low credit scores in India. How and why do they get caught in this vicious web?
One reason is many people have so many credit cards (individual use and family members’ use) that they are unable to monitor their card spends (yes, despite the monthly statements). They lose track of all the points of expenses via credit cards. For instance, if a swiping card by one credit card company gets you extra miles as rewards, another may get you free movie tickets or supermarket discounts. There could also be times when consequences of swiping would be the last thing in your mind – medical emergency situations. All these are ways you can get trapped in endless cycle of debt.
Luckily, it is not rocket science to get your credit discipline under control and escalate your credit score. All you need is some patience and diligence as it could take a few months to undo the damage.
Here’s how you can go about it:
- Shortlist some reputed alternative lenders and get in touch with them:
The first step of your plan to dispose of credit card debts is to research refinancers your city. The loan refinancing business has established itself well with more and more people looking for ways out of debt traps. Fintech startups are booming and each company has specific target clientele. Get in touch with those lenders that suit your source of income (salaried, self-employed).
- Evaluate the credit card debt repayment strategies they lay out in front of you:
By the time you schedule your meetings with the lenders, you would have garnered sufficient understanding about debt consolidation and settlement. If you have decided to pay off your debts with quick personal loans, don’t forget to compare the APRs and processing charges among other fees.
- Weigh the pros and cons to choose the most lucrative option:
Lastly, you may combine the pros of all the plans and options to design your own plan to tackle your debts. For instance, switching early in the tenure can be more beneficial as lenders charge more interest in the initial phase of the loan term. Remember, no bank or lender is your friend. You can only get information from them. It is up to you to opt for a plan that saves you from paying huge interest.