Loans against credit cards are emerging as a convenient way to borrow funds without any hassle or restriction on their usage. The process does not require borrowers to complete extensive paperwork, making it quick to avail of. Loans taken against credit cards are the ideal option to avoid financial difficulties.
These reasons make this credit facility so popular. If not used responsibly, the same loan can cause many problems simultaneously. Credit card bill payments made on time help manage debt effectively. Therefore, credit card repayment is crucial to avoid falling into a debt trap. There are other ways, too, written about below:
Top 5 Tips to Repay Your Loan Against Credit Card Effectively
The following content provides you with a brief guide on how to pay back the loan taken against a credit card most effectively and get out of the debt trap as soon as possible:
Repay Debts with the Highest Interest Rates
Borrowers with loans on multiple virtual credit cards must pay off the loan with the highest interest rate. Usually, people repay the loan with the lowest interest rate at the earliest. It should be the other way around. A high interest means the loan will collect more interest with time, and the total outgo increases significantly. First, pay off the loans with a high-interest rate and then proceed to the lower ones.
Extension of Loan Tenure
The next step to manage your debt effectively is to extend the repayment tenure. The lender finalises a loan tenure as per your repayment capacity. If you struggle to repay your loan within that tenure, you can always request the lender extend it. It will lower your EMIs further and then help you repay successfully.
Yearly Adjustment of the EMIs
Usually, the EMIs are adjusted every year, and if you can manage a higher instalment, then you can do that. You can increase your EMIs to pay off the loan easily and vice-versa, one of the more effective ways to manage your debt without stretching your budget.
Part-Payment of the Loan
One of the easiest ways to repay a loan is by making part payments. If you have an additional source of income, use that fund to make a partial payment to lower your total debt. The results are lower EMIs and the ability to adjust the repayment tenure. The lender often charges an extra fee for making part payments. You should check the details of your credit card provider and act accordingly.
Consider the Balance Transfer Method
Balance transfer is the most widely used technique for credit card bill payments. Here, you can transfer the loan balance of one credit card to another card provider. The other provider will settle the debt with the previous credit card issuer, and you will repay with the new one.
Remember, you can transfer only the amount that falls within the credit limit of the second card. Before deciding on a second card, make sure you understand all the terms and conditions, so it can align with your goal and not take you into another debt trap.
Also Read:- What Is Credit Card Balance Transfer and How Does It Work?
Conclusion
Managing credit card loans effectively can help you eliminate all your debts easily and quickly. You can use the strategies mentioned above to your advantage to ensure you can handle your outstanding debt. Always remember that planning is the most essential part of any debt management. Make a financial plan and stay true to it to avoid any struggles in the coming days.
