What to Do When You Can’t Pay Credit Card Bill

A hefty credit card bill can be a big financial challenge for you as it comes with an interest rate of 36 to 40 percent per annum.

You suddenly realize that, at such a high interest rate, you may never be able to pay off the outstanding loan. You focus only on paying the interest, but at such a high rate of interest, it is not wise to adopt this type of strategy.

There is another route you can take. Convert your remaining credit card debt into a personal loan. Many banks provide you with this option.

And in fact, if you’ve been paying off your credit card debt on time, you might even get a call from a bank official who might offer you the option of converting your remaining credit card debt into a personal loan.

Different banks charge an annual interest rate of 14 percent to 18 percent on personal loans.

If you choose this option, you may have to pay some service charges, which is much better than the annual interest rate of 36 to 40 percent.

You just need to talk to your bank about this. It is not necessary that all banks agree to this. After all, why would they lend you money at 14 percent when they can earn 36 percent? Whenever you get a call from a bank official, pay attention to everything about it.

Almost every week, you can get calls offering you the option to top up the personal loan or pay off the credit card debt in easy installments.

This is possible only if you are eligible to take the loan and have never defaulted on loan payments. Let us know from an example.

Recently, a private bank official called and offered to convert my credit-card loan into easy installments. It’s a very clear thing: I was paying my credit-card bill in full, well in advance, within the stipulated 45 days every month.

This meant that I was making full use of the stipulated period of 45 days and that the bank was not getting any benefit from me. It was like losing 45 days interest for the bank.

So it was a better option for the bank to persuade me to pay in easy installments (EMI), which would at least make some profit.

If you also have a personal loan going on and you are paying on time, then the bank tries its best to continue (top up) that loan further.

So, be careful; convert your credit card debt into a personal loan only if you are facing difficulties in repaying it.