Credit Card

CREDIT CARD

A credit card could offer several benefits in the form of reward points, discounts, cashback etc. However, irresponsible use of credit cards – spending carelessly without having the repayment capacity, missing your card bill payments or paying only the minimum amount – can lead to piling up of your credit card debt. Since credit card debt attracts heavy charges and penalties, it can lead to a financial crisis very quickly.

Unpaid dues along with fresh transactions made through the credit card would continue to attract heavy finance charges of around 40 percent p.a. till the time you repay the entire outstanding amount along with the charges and penalties.

Also, a credit card debt is likely to impact your credit score, too, which in turn will adversely affect your ability to borrow in the future. So, for example, a credit card debt can derail your life goal of buying your own house, as a poor credit score will reduce your ability to take a home loan.

Hence, it’s best to avoid a situation where your credit card debt goes out of hand. But in case you are stuck in such a situation, here are three solutions that may help you reduce the burden.