Unable to Pay Your Credit Card Bill On Time? Here Are Your Options!

The ongoing Covid-19 pandemic has created a lot of health and financial difficulties for millions of people in India. Many have lost their jobs or have had to manage with reduced income making it difficult to make ends meet. This has led to many defaulting on their credit card payments.  

Default on credit card dues has various consequences like late payment charges, a drop in your credit score, and higher interest charges in the future. If you do not pay your credit card dues for more than 90 days, then the credit card provider will freeze your credit card and turn in your account to debt collection for getting their dues paid. The debt collection team can even sue you and seize your assets. This is a very unpleasant experience which many dread not experiencing. 

Also Read: What happens if you delay or miss credit card payments? 

What are the options available if you cannot pay your credit card bill on time?

There are a few options available for credit card holders if they are not able to pay their credit card bills on time.

• Pay the Minimum Amount Due

The credit cardholder can pay the minimum amount due on their cards if they are not able to pay the entire bill amount for the month. This would help to keep the card operational and reduce the interest burden. It will also help maintain your credit score. If you don’t pay even the minimum amount due, then you'll be charged late fees.

• Have a word with your Bank

If it is not possible to pay even the minimum amount, then have a word with your bank.  Discuss your difficulties and see if the bank gives some alternatives like extending the due date etc. If you have had a good repayment history, then banks do give consideration to genuine credit cardholders who cannot make their credit card payment.

Additional Reading: Credit Card Debt Negotiation: How to negotiate effectively? 

• Avoid using your Credit Card

If you have not been able to pay your credit card dues, you should not use it to increase your dues. As additional purchases will only further increase the credit card bill. Also, you would be charged higher interest on the total outstanding amount. So, not using the card will halt the increase in overdue for some time till you get your finances sorted. 

• Consider Balance Transfer

A balance transfer is a good option that will allow you to shift your existing credit card dues to a new account that has a low rate of interest. Some lenders even provide 0% interest on a new account for the first few months. This would help to pay off your dues faster and at low interest. Going in for a balance transfer would allow the credit card holder to consolidate their debt and pay it off in a timely manner. 

• Opt for a Personal Loan

A small personal loan would be a prudent alternative to pay off your credit card dues. They have a lower rate of interest as compared to credit cards and have the option of EMIs. Going in for a personal loan will reduce your credit card dues and subsequent interest burden on such dues.

Also Read: What is a Personal Loan?

Smart Tips to Avoid Credit Card Debt Trap

 Mounting credit card dues can slowly become a debt trap making you shell out huge interest and late payment fees on such outstanding dues. To avoid such a debt trap, one can follow simple tips while using their credit cards.

• Keep Track of your Credit Card Dues

Keeping track of your credit card dues will help you to plan your monthly finances in a prudent manner

• Pay high-interest Credit Cards on Priority

Paying off the high-interest cost credit card will help to reduce the interest burden substantially. This will also ensure that you do not incur a high late payment charge on that card. You will also get some more time to pay off the rest of your credit cards if any in a better manner.

• Convert Credit Card Bills to EMIs

Converting your existing credit card bills to EMIs will help you to clear off your outstanding dues in a systematic manner. Such EMIs also come at a lower rate of interest as compared to the actual credit card interest charge. You will be able to reduce your interest burden on your total outstanding considerably by opting for EMIs

Also Read: Which are the different credit cards available?

Conclusion

Having credit card debt is a daunting task but there are ways to reduce it. One should, however, prudently use their credit cards so as to avoid unnecessary credit card dues, interest charges and late payment fees. By following the simple tips mentioned above, one can still manage their outstanding debt in a prudent manner.