Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
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    How to Come Out of a Credit Card Debt Trap

    Credit cards are one of the most used financial products today. The popularity of this is such that credit cards can be attributed to creating a new revolution in the way finances work. This plastic card allows holders to borrow money on a credit to purchase goods and services and pay back the same every month. Credit cards also come with a number of offers and features such as dining discounts, fuel surcharge waiver and so on. However, for all the benefits offered by credit cards, if individuals do not pay their bills on time or do not use their card judiciously, it can result in their falling into a credit card debt, which is difficult to come out of. Falling into a credit card debt trap will also result in their credit score falling, making it difficult for them to procure loans or other credit cards in the future. However, it is not impossible.

    Steps to Follow to Come Out of a Credit Card Debt

    By following the steps given below, customers can come out of this debt.

    Credit Card Balance Transfer

    One of the options that customers can avail is to transfer their outstanding debts to another credit card. This is also a feasible option. They can either procure a new card for this purpose or they can use on of their other existing cards. When a new card is procured, a limited promotional period will be available during which the interest rate will either lower or will not be applicable on the balance that is transferred. The objective of this option is for customers to avail a certain limited period that usually ranges from 3 months to 6 months, in which finances can be worked out and the entire debt can be paid off.

    For example, certain credit cards from SBI will allow cardholders to procure a 60 day tenure at 0% rate of interest or a 6 months tenure at 1.7% rate of interest per month. However, it must be noted that the transferred balance will have the usual rate of interest applied after the promotional period ends. A number of credit card providers allow individuals to convert their transferred balance into Equated Monthly Installments or EMIs. Prior to opting for this choice, customers must first compare the benefits and offers, processing charges, rates of interest, duration of promotional period and other features prior to settling on one card for the purpose of balance transfer. It is always better to look around, research and compare prior to settling on one card.

    Fresh Loans at Lower Rates of Interest

    Another option that can be procured by customers is to raise a loan to pay off the credit card debt. Rate of interest on gold loans, personal loans or loans against bank fixed deposits and securities are relatively lower than the interest rates that are charged by credit cards. For example, interest rates on credit cards generally range from 25% to 30% whereas personal loans come at rate that is much lower, such as 12% to 25%. In case individuals are unable to procure personal loans due to low credit scores or income, they opt for gold loan or loan against securities.

    Conversion of Outstanding dues into EMIs

    This is another option that individuals can choose to come out of their credit card debt trap is to convert their outstanding balance into EMIs instead of transferring to another credit card or procuring another loan. Customers can convert their balance into EMIs of 3 to 12 months period, and usually at a rate of interest of about 18% per annum. However, it must be noted that a processing fee of 1.5% to 3% is charged for converting their outstanding balance into EMIs. If EMIs are not paid back by due dates, a standard credit card interest rate will be applicable on the balance amount.

    Redemption of Investments

    This option should be chosen only if liquidation of existing investments does not carry a high opportunity cost. For example, closing fixed deposit accounts for repaying a credit card debt is feasible only if interest rate applicable is not over 9%. This is lower than the rate of interest that will have to be paid even on alternative loan options such as gold loan, personal loan or an EMI conversion. On the other hand, redeeming equity mutual funds may result in a high opportunity cost especially during a bullish market trend. During such times, returns on equity investments can be as high as 20% or even higher making personal loans a much cheaper option.

    One of the fastest growing debts today is due to credit cards. Customers should always be careful when it comes to using their credit card and must always be aware of the bill that is being accumulated. Credit cards must only be used if it can be repaid comfortable at the end of the billing cycle. That being said however, there are instances when individuals fall into a credit card debt despite their best efforts. In such cases, any of the above options can be chosen and as much as possible, settlement should be avoided. Also, until the debt has been paid off, customers should not opt for fresh transactions on their card. Finally, customers must always study their credit report and work on enhancing their score. By following the above steps, customers can come out of their credit card debt soon.

    Why You Should Choose Credit Cards Over Debit Cards

    These days, people at least have one credit card and one debit card in their wallet. When you look at these cards, they are almost similar. However, the benefits each type of card offers is different. Although both are plastic money, have a 16-digit unique number, and works only when you enter the PIN, the way they function is different.

    While debit cards allow you to use your funds that you have in your bank account, credit cards allow you to borrow money from the bank/credit card company and allows you to repay it later. While using your debit card might ensure you do not fall into the debt trap, credit cards offers a lot of benefits.

    Most of the credit cards that are being issued in India are exclusively designed to offer discounts, cashback, coupons, and reward points that will benefit the cardholder, motivating them to use their credit card frequently. Yes. Credit cards have the potential to push you into the debt trap. However, if used wisely, it can be beneficial.

    Some Of The Reason Why You Should Choose Credit Cards Over Debit Cards

    • Credit cards help you buy expensive products on EMI without burning your savings account. You can use the funds you have in your bank account for other purposes and still buy things you love to own. Most credit card providers also offer No-Cost EMI these days, which means you do not have to pay any interest or additional charges when you convert a transaction to EMI.
    • Most of the credit cards come with a great loyalty program where cardholders can earn reward points on certain spends made on their card. Cardholders can use these reward points to claim free gifts, book flight tickets, buy selected merchandise, or even pay there credit card bill (depending on the type of card they own).
    • Credit cards also give reward points if you use your card to pay your utility bills. This way, you will land up saving while you spend!
    • If used wisely, credit cards help you build your credit score. Debit cards do not have the potential to help you build your credit score.
    • Some credit cards even provide additional benefits like extended warranty on some products purchased using your credit card. However, most cardholders are not aware of this feature and fail to use this benefit.
    • From time to time, credit card providers tie-up with retailers and offer exclusive discounts for their cardholders. Debit cards do not have these promotional offers.

    In conclusion, having both debit and credit cards are beneficial, if you use them wisely.

    Credit Cards Reviews

    • HDFC Bank Credit Card
      "Good in all"
      0.5 5.0/5 "Blown Away!"
      HDFC Bank has offered me a credit card and the customer services are good. They also provide me with good offers and a very good credit limit. It is a smooth process while using the card, I never faced any hassles in the overall process till date.
      Was this review helpful? 0
      , kolkata
      Reviewed on Mar 22, 2019
    • Citibank Credit Card
      "Experience is good"
      0.5 5.0/5 "Blown Away!"
      Citibank has been overall good in the customer services. The online banking is good and the credit card offers are also good. The statements are also good and the billing is also in a timely manner. The credit limit is also fine and there are no charges taken for the card.
      Was this review helpful? 0
      , kolkata
      Reviewed on Mar 22, 2019
    • ICICI Bank Credit Card
      "Average"
      0.5 3.5/5 "Pretty good"
      I have been using ICICI Platinum card for more than 1.5 years. The credit limit is low which they need to increase. IVR takes longer time for the connectivity also they need to improve the service. There is no annual charge for this credit card.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • RBL Bank Credit Card
      "Good card for the withdrawal"
      0.5 5.0/5 "Blown Away!"
      From RBL I have et money card it gives the flexibility of taking the cash without any interest. I can withdraw the maximum of 100%, the credit limit is also satisfactory with RBL card. One month back I got the card, the due date is convenient for me.
      Was this review helpful? 0
      , pune
      Reviewed on Mar 22, 2019
    • HDFC Bank Credit Card
      "Recommendable Card"
      0.5 5.0/5 "Blown Away!"
      I get 10x points from HDFC card based on the spends, In fact the cash back is also excellent. The customer support is good for the credit card queries, but there is a long queue to connect with the executive. They don't have direct contact no, first I need to verify my details in IVR, then again the executive verify it, therefore the process should be simple.
      Was this review helpful? 0
      , pune
      Reviewed on Mar 22, 2019
    • Citibank Credit Card
      "Good card for all transaction"
      0.5 5.0/5 "Blown Away!"
      I have reward points from CITI bank, I get more bonus points on the transactions, they give cash back offers for some transaction, I don't what to call them everything is prefect, the interest is also reasonable, I am using life time free credit card.
      Was this review helpful? 0
      , pune
      Reviewed on Mar 22, 2019
    • HDFC Bank Credit Card
      "Need to increase the limit"
      0.5 5.0/5 "Blown Away!"
      I have HDFC Bharath credit card and using it for past 1.5years. The service is excellent and they are not charging high for the late payments. The credit limit is average and they need to enhance the limit. It is a life time free credit card. There was no much offers.
      Was this review helpful? 0
      , vadodara
      Reviewed on Mar 22, 2019
    • Bank Bazaar Credit Card
      "Simple method for getting credit card "
      0.5 5.0/5 "Blown Away!"
      Through Bank bazaar it is a simple process of getting the credit card in quick time .It hardly took 1 week of time in Online method . I came to know bank bazaar through SMS . Customer executive guided about the various credit card in online . Mobile app is also user-friendly .
      Was this review helpful? 0
      , kolkata
      Reviewed on Mar 22, 2019
    • Axis Bank Credit Card
      "Good card"
      0.5 4.0/5 "Great!"
      Axis Bank has offered NEO credit card and am using it for past 6 months. The credit limit is sufficient for the beginner, its 40K. The rate of interest is too high for late payment charges which they need to reduce. It is a life time free credit card.
      Was this review helpful? 0
      , vadodara
      Reviewed on Mar 22, 2019
    • IndusInd Bank Credit Card
      "Online shopping and EMI is major advantage"
      0.5 5.0/5 "Blown Away!"
      I recently applied for the Indusind bank credit card in the on-line method . Within 10 days of time ,I got a good response till the time of dispatchement of my card . No annual fees for this card . The main plus point with Indusind bank credit card is the on-line shopping .
      Was this review helpful? 0
      , kolkata
      Reviewed on Mar 22, 2019
    • Kotak Credit Card
      "Good Card with Kotak"
      0.5 5.0/5 "Blown Away!"
      I am using Kotak Mahindra card for around two years, I have salary account hence everything is fine for me. The credit limit is not good because they gave only Rs.22,000, they need to enhance the card limit. I have master card and the accessibility is great.
      Was this review helpful? 0
      , faridabad
      Reviewed on Mar 22, 2019
    • RBL Bank Credit Card
      "Average Credit card"
      0.5 5.0/5 "Blown Away!"
      Almost it is going to be 3 months since I started to use this RBL credit card . Normally I will do most of the shopping Off-line .Offers are on-line and it is up to the expectation . RBL mobile app is very easy for making the payment and downloading the statement .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Mar 22, 2019
    • Axis Bank Credit Card
      "Credit limit is not sufficient "
      0.5 5.0/5 "Blown Away!"
      For the past 6 months, I am using the AXIS bank credit card . My credit limit is around 25 k only . But this credit limit is very insufficient to use .I am not getting any notification about the various offers in on-line . Annual fees is around 499 - .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Mar 22, 2019
    • Axis Bank Credit Card
      "EXCELLENT"
      0.5 5.0/5 "Blown Away!"
      I have been using the credit card with the AXIS BANK the card is user friendly to use. The credit limit with this card is satisfactory added on that the offers with this card is good. I am using it from last few years with this card. There is a EMI conversion option but there is no balance transfer option with this card.
      Was this review helpful? 0
      , bhopal
      Reviewed on Mar 22, 2019
    • ICICI Bank Credit Card
      "BETTER"
      0.5 3.5/5 "Pretty good"
      I am not satisfied with the credit card that i am using it with the ICICI BANK because the credit limit with this bank card is not satisfactory also there are no offers available with this credit card. There is a EMI conversion option with this credit card which is good also it is easy to convert.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • HDFC Bank Credit Card
      "BETTER"
      0.5 3.5/5 "Pretty good"
      I have a credit card with the HDFC BANK the credit limit with this bank they have offered is average and i am not getting any offers with this bank. There is a EMI conversion option with this bank it is good and easy to convert with this bank credit card.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • ICICI Bank Credit Card
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      It has almost been ten months since i am using this credit card and the services which they had provided me has been pretty good. But the credit limit with the card has been less and there has not been any annual charges with this card. I had been using this credit card for all sort of purposes.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • HDFC Bank Credit Card
      "Excellent card"
      0.5 5.0/5 "Blown Away!"
      HDFC has given me a Money Back credit card and using it for past three years. I am happy with the credit limit. There was no annual charges and am paying monthly due. The charges are reasonable for EMI conversion. I got reward points but my sister use to redeem so have no idea.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • IndusInd Bank Credit Card
      "Excellent Service"
      0.5 5.0/5 "Blown Away!"
      I am just using this credit card for the last one week and the services which they had provided so far has been pretty good. They had given me with a good credit limit and it does not have any sort of annual charges. I am using this credit card for all sort of purposes.
      Was this review helpful? 0
      , bangalore
      Reviewed on Mar 22, 2019
    • RBL Bank Credit Card
      "Good for all transaction"
      0.5 4.0/5 "Great!"
      I am holding RBL bajaj credit card, features are like the monthly benefits which they give like surcharges on the products, extra points on the shopping with the air lounges. The limit is very satisfied with RBL credit card, I am happy with it.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Mar 22, 2019
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