Credit cards are a form of short-term, unsecured financing where a borrower uses a pre-set line of credit to purchase goods and services and repays the due amount at a later time. A borrower pays a certain amount of interest along with the due amount only if the amount is not repaid beyond the pre-specified grace period.
Credit cards offer much better security, convenience, and flexibility than their counterparts. You can even reduce debt of your credit card by following some simple steps. It can help you save a significant amount of money and improve your finances in the long run.
Here are some of the methods you can apply to lower your card’s debt.
- Pay the high-interest card first –
If you own more than one credit card, try to pay off the card with the highest rate of interest before making any other payments. Delaying payments on the high-interest card will accumulate more debt against your credit account. Methodically paying off card debts is one of the most proven methods if you are looking to reduce the credit card debt.
- Create a budget –
Create a monthly budget, setting goals of your expenses through the credit cards. It can help significantly to reduce your credit card debt.
As you organise your expenses, you will see the possible areas where you can save money. That extra fund can be utilised to pay your credit card bills and clear existing debts faster.
- Negotiate a lower interest rate –
Try to negotiate for a lower rate of interest whenever you apply for a credit card. Lower rates will ensure you incur lesser interests on your outstanding dues. You can also check the fees and charges associated with a credit card before you apply for one. Choosing a financial tool with minimum associated fees can help you reduce debt significantly.
- Pay the total due –
Always remember to pay the total outstanding on your credit card instead of the minimum due. Paying the minimum due will cause the balance to carry over to the next month. Your credit account will accrue the expenses of the present month and increase the debt to a significant amount.
- Utilise the rewards –
Credit card companies run several loyalty programs like reward points, complimentary services, etc. You can utilise these rewards to avail substantial discounts on your purchases and reduce debt.
For example, reward points can be redeemed at various online and regular shopping destinations in exchange for discounts and cashbacks. It can help you lower the total due amount and reduce debt on your credit card.
Financial institutions like Bajaj Finserv offer a substantial sum of reward points against every Rs. 100 transaction made with the Bajaj Finserv RBL Bank SuperCard. You can also get up to 20,000 points as a welcome gift and bonuses when you meet certain expense milestones. The SuperCard offers other add-on services like complimentary airport lounge access, fuel surcharge wavier, 1+1 movie tickets, etc. which can bring down the total amount you spend on your purchases.
Bajaj Finserv also provides pre-approved offers on credit cards, advances like personal loans, business loans, home loans, and on other financial products. These offers make the process of availing finances easier to save time on approval and disbursal. You only have to share some essential details online to check your pre-approved offer.
Following these tips will help you reduce credit card debts significantly and help you save money while paying off the dues. Responsibly use your card to avail better features, increase your earnings and avoid accumulating debts altogether.
