Credit card debt is becoming an attractive proposition for most millennials as they come with attractive offers like rewards systems and life-long free membership offers. Each credit card company is competing with the others to offer more and more attractive rewards. The year-end sales by e-commerce platforms, the one month credit that comes with paying by credit cards are all powerful nudges to engage in impulse buying. The total credit card debt in India was Rs 2.7 trillion in June 2024. The compound annual growth rate is 24% over the past five years . The flip side of credit cards is that credit card holders must pay an exorbitant interest in case of delinquencies and defaults. Understanding the high interest debt that credit cards offer is key. The average credit card interest rate, levied on late payments, varies upwards from 30% p.a. These high interest rates are one of the main reasons that you must reduce your total credit card outstanding debt.
In this article, we explore how to use credit cards judiciously and carry our credit card debt management in 2025.
SingleDebt is a well-known debt management and financial advisory company. We are well poised with our trained team and expertise to advise you on strategies on credit card debt reduction and management techniques.
Paying off your high interest credit card debt helps evolve your money management skills and emerge debt-free in 2025. It also helps you build your credit worthiness and improve your credit scores.
Make a complete listing of all your credit cards along with outstanding balances, the payment due dates, penalty interest payable, the minimum balance payable on each and the yearly fees that are charged on the cards. It is better if you create an excel sheet with all details to track the same.
If you have multiple credit cards, it is better that you identify the chronology of payments so that you can make the payments in order and avoid any late payment charges. This is a systematic way in which you avoid defaults or late payments. Making payments on time also helps you to reduce your credit card debt and improve your credit score.
In this you identify and rank all the payments carrying the highest interest rate and schedule them first in the priority of payments. This is like using the debt avalanche method to pay the highest interest debt first. This way, both the outstanding credit card debt balance and interest reduces quickly enabling you to get a grip on your credit card debt. As your outstanding debt burden with high interest costs reduces, your credit score improves. When you are juggling your payments, you can pay the minimum amounts on cards with lower interest rates.
It is always important to pay more than the minimum. If you cannot do so, always make sure that you make the minimum payments on all your credit cards. This method will help you to avoid additional late payments on your credit cards. If you do not make these payments and you cross your credit limit, your credit cards may get suspended.
Ensure that you pay your credit cards on time. This way, you can avoid delinquencies and defaults. It is always a good idea to pay a day or two in advance.
Though normally banks don’t give extension of time on credit card payments, it is always better to try to negotiate with your issuers of the credit card for better terms. Terms like the yearly fees can be waived off or interest rates can be reduced at the banker’s discretion. If you are a long-standing customer who otherwise has a track record of making regular payments, this improves your negotiating ability. If you have a poor credit history and a low credit score, your negotiation chances are not particularly bright.
If you have different credit cards with varying rates of interest, you could consider making a transfer of the outstanding balance from the high interest credit card to the low interest one. This way you reduce the interest payable on the outstanding balance. This is an accepted credit card management device. The advantages of this is you have a single credit card, albeit with a large outstanding balance. You can make faster payments for a considerably lower interest payment. Though this may temporarily lower your credit score, you can build up the same in the long run.
This strategy has the advantage of enabling you to pay off your entire credit card debt and replacing it with a personal loan. The rates of high interest can vary from 30% to 45%. One caveat is to ensure that your personal loan interest rate is lower than the credit card interest.
It is a wise technique to pause investing while you are in debt, unless you are confident of earning a return on your investment that exceeds the interest rate on your credit card debt. Only seasoned investors can consistently earn such a high return percentage. It is also a good tactic to reduce your impulse buys on your wants. When you are in debt and struggling under a financial crisis, limit your expenditure to only the necessary ones. Liquidating your investments to pay off your credit card loans is also a good strategy.
It is always better to increase your income and look for secondary sources of earnings. If you have good skills, you can convert this to a secondary source of income. But ensure that you route all this income to paying off your debt early. This can spur you on to more efforts in your credit card debt reduction. If you have missed an EMI or a credit card payment, then you can reply on the debt management plans by Singledebt to steer you to safety and achieve financial freedom in the process.
Hope you all enter 2025 with a new zeal and mission to reduce your credit card debt in 2025. Managing your credit card balances better ensures that you can enjoy less stress and manage your finances responsibly. The above tips can aid you in better credit card management.
SingleDebt provides comprehensive debt solutions to manage your credit card debts responsibly, offering tailored financial advice and structured repayment plans to ease your financial burden. By consolidating your debt and negotiating with creditors on your behalf, SingleDebt helps you regain control of your finances and work toward a debt free future. Take the first step toward financial freedom today—contact SingleDebt to explore how we can help you manage your credit card debt effectively.
SingleDebt specializes in effective debt management solutions, helping individuals and businesses reduce their debt and regain financial stability.
