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For the majority of people, credit cards act as an important resource in times of financial crunches and if you have lost your income recently due to a coronavirus pandemic, this financial tool may have become your lifeline which might be helping in meeting your basic lifestyle requirements.
However, at the same time, if you are not able to make your credit card payment on time, credit card debt can add up quickly and result in longer-term financial challenges. And dealing with debt can be very stressful.
A large number of credit card owners are dealing with a large amount of debt. This is primarily because many people have lost their source of income due to the COVID-19 pandemic and they are not able to make the credit card payment on time. Unfortunately, some of the banks in the UAE charging high-interest rates on credit card debt. So, if you are also one of them who is not able to manage your higher credit card outstanding dues and looking for effective ways to manage it, then you have come to the right place.
In this article, we will share a few handy tips for managing credit card debt during a pandemic.
If you carry more than one credit card and you are going through a financial burden, then you can choose to make the minimum due amount payment on every credit card. Avoiding your card payment may attract hefty penalties that will significantly impact your future repayment plan. In addition to this, try to prioritize the repayment of credit card bills that have a high rate of interest. This will eventually help you in lessening the ongoing debt burden.
In order to reduce the financial burden of credit card debt and corresponding high-interest rates, you can opt for a balance tranasfer credit card which allows you to transfer to outstanding balance at a low interest rate. Well, this is the most common way of lessening the debt burden as there are many banks and credit card lenders in the UAE that offer a low rate of interest or introductory perks to card members transferring the outstanding amount balance from a credit card. Plus, it does not levy any sort of penalty charges and gives much-needed relief to its borrowers.
Yet another best way of lessening the burden of credit card debt is to convert your outstanding dues on your credit card into easy to pay monthly installments. The interest rate levy on EMI is usually lesser than what you will have to pay on credit card dues. Outstanding dues must be paid off every month on time otherwise it will attract a very high-interest rate. And if you are unable to clear your dues on time then it is ideal to choose the option of “convert to EMI” instead of accumulating debt. This will significantly help in reducing the overall burden of interest.
We all know very well that credit cards levy a high rate of interest when compared to the other borrowing options. And if you are trapped in a credit card debt then you can procure a personal loan in order to reduce the debt burden. Though a personal loan may also come with a high-interest rate, it is lowered in comparison to the interest rate levied on credit card debt. Thus, you can consider this option and use a loan amount to pay off your outstanding dues in one go. But please note that opting for a personal loan means that you will have to pay off the EMIs of the personal loan every month until and unless you make the full repayment of the loan. So, be sure to weigh all the benefits and setbacks of a personal loan before opting for one.
Credit card discipline is very essential when it comes to reducing the burden of credit card debt. Managing the plastic card is simple if you follow few basic rules around expenses. Just try to avoid unnecessary expenses and piling up a new debt because it will make the situation challenging in the future. Also, if you really want to reduce the burden of a credit card, then make sure you use your credit card for your NEEDS, not for your WANTS.
Usually, when you utilize a plastic card, you receive a no-interest period of up to 50 days for making the repayment of your credit card bill. The due date of payment is basically the last day of the no-interest period. But, if, in case, you don’t pay your outstanding dues on time, late payment and interest charges may be levied on the due amount. In addition to this, your credit score will also get affected negatively.
However, credit card lenders also provide the “Minimum Due Amount” option that is a portion of the total credit card dues ranging around 5% of the outstanding dues. If you make the minimum due amount payment, then your credit card remains active and you do not have to pay any kind of late payment charges or penalty. But, credit card companies levied interest charges on the outstanding dues.
It definitely makes sense to pay off your credit card outstanding dues rather than delaying your payments. Because delayed payments do not increase your debt burden but also take a significant toll on your credit score.
A plastic card that is available with its full credit limit can add great value in times like these. This is indeed the most flexible yet convenient financial tool that can act as a back-up plan during financial crunches. In addition to this, you can also get benefits like EMIs.
Please note that credit card members who make their credit card repayment always on time can also avail of offers like pre-approved loans for immediate and additional financial requirements. The best thing is that these loans come with no paperwork and assist in easing financial difficulty.
So, use all the aforementioned tips in order to get back your credit card payment on the right track and avoid falling into credit card debt during these coronavirus pandemic times.