How to pay off your credit card debt
credit card dues. What should he do to about the mounting interest costs on his card spends?
Ashmit has crossed the first hurdle in dealing with a debt trap by recognising that he needs to do something about his credit card dues. Several spenders are unaware of the interest burden and end up repaying a large sum over a long period of time. In some cases, it also reflects reckless spending or over-spending. Credit card dues that remain unpaid are the costliest loans an individual can take from the bank.
Ashmit has three choices. First, he can request his credit card issuing bank to convert the dues into a personal loan. He will have to speak to the bank, find out about the terms for such a conversion, and complete the procedures, if the bank is willing to enable such a conversion. The EMIs will help divide his outgo into smaller, affordable portions, and also reduce the risk of default. He can then repay the personal loan in easy monthly installments, at a lower interest. Second, he can take a personal loan from his bank at a low cost and repay the credit card outstanding dues in full. He can choose a tenure of his choice. This option is feasible if his card is with one ban and accounts are with another. It serves the same purpose of reducing the interest burden. Third, he can take a loan against his deposits or investments from his bank and repay the credit card dues. A loan against an asset comes at a much lower cost, and can also be repaid in installments without selling the asset.
Ashmit should always consider his loan options in their entirety. It will not make sense to have a deposit that gives a 9% return and keep a loan that costs 36%. Ashmit should seek
