The pandemic has generated a situation of financial crisis for many all over the world. As a result, most credit card companies have offered monetary help to their customers. The government of India also has also issued relief to small and middle-income groups in different ways. People who have taken huge loans against credit cards can benefit from the government’s policies and use them to pay off debts and high interests. The relief is provided with the help of banks and monetary institutes. Initially, a six-month relaxation period was issued to all the credit card users, helping them immensely. Individuals who chose moratorium alternatives noticed a tremendous hike in bills as the interest continued to accumulate during that period. Fortunately, the government announced a waiver of compound interest on credit card dues during the abeyance period.
Issued monetary reliefs can be availed in the form of free waivers, reduced interest rates, decreased monthly payments, and more. It is imperative to keep a steady credit score to avoid any dismissive reporting at the credit desks. Here is a list of things you can do to manage credit card payments during the ongoing covid-19 pandemic:-
Opt for balance transfers
In this, the customer can choose to transfer the due amount from a high-interest rate card to another credit card that assures lower interest rates. This eases credit card bill payment and reduces the burden of debt for individual customers. And also, this doesn’t imply paying additional charges incurring a sense of relief in them.
Make the minimum payment
It is very natural to experience financial stress when the credit card due amount gets extended beyond a certain level, but paying a minimum amount on the due date may help overcome this stress. However, in case of delayed payments, the borrower may have to pay a heavy penalty. Make sure to pay the bills which have a high credit card interest rate.
EMIs can be a good alternative
In case of outstanding credit card dues, you may consider opting for an EMI facility.
The rate is generally lower than other circumstances. This can significantly help you in paying off debt at lower interest rates.
Take a personal loan to pay off debt.
While opting for a personal loan to pay off the credit card bills does not reduce the debt amount, it only alters the loan type. As interests charged on credit cards are higher than other borrowing options, you can opt for a personal loan to pay off the generated amount on time. Personal loans may also come with a higher interest rate, but it is usually lower than credit cards. Also, this will help you to clear the loan in a single attempt and get an ample amount of time to figure out the money required to pay off the personal loan.
Manage efficient planning and cut down unnecessary expenditures
Discipline is highly crucial while trying to relieve debt. One must shop wisely while managing credit cards. Individuals should not pile up new debt before clearing the old one.
Know how credit card balance is calculated to manage your dues efficiently
- When a customer uses a credit card, 50 days is initially given to repay all the debt-free of interests.
- The last day to pay the bill is the due date approved to the customer by the financial institution.
- In case you fail to pay the bill within the due date, the bank might charge interest rates along with the due amount.
- Also, the credit score gets affected too.
- The lenders/banks charge “Minimum Amount Due” which is typically a part of the “Total Outstanding Dues”, which ranges around 5%.
- If in case the borrower only pays the minimum due amount, their credit card and the account remain active, eliminating all chances of penalty. But note that the interest rates are still levied on the remaining dues.
If nothing worked out in your favor and you are unable to repay your debt, here are few things that need to be considered.
- You can utilize amount from the EPF amount
- Use emergency funds
- Liquidate non-essential investment for raising necessary funds
- Opt for a loan from family, friend, or any other financial institutions
These were the necessary things to keep in mind while managing credit card bill payments during covid-19. It is essential to clear out all the remaining dues on a credit card instead of waiting for the due date to arrive. If the debt is not paid on time, the interest increases and impacts the credit score. Customers using a credit card and maintaining consistent on-time payment can avail various offers in terms of taking loans that are pre-approved for emergencies. This requires absolutely no paperwork and help to overcome financial crisis effectively, at a rapid pace.