Though credit cards offer you unmatched financial freedom, they come with high annual percentage rates (APRs) that can go up to 36%. This means that if you are not diligent with repayment, you can accumulate staggering credit card debt in no time at all. The situation is trickier when you have pending dues on more than one credit card. Nevertheless, you can consolidate your debt through a low-interest loan. For instance, you can opt for a personal loan for credit card debt and prevent your outstanding dues from multiplying further.
While there are a number of ways in which you can consolidate debt, not all of them are cost-effective. To be in control of your finances, look into these 5 smart options.
Create a New Household Budget
Debt consolidation requires you to be disciplined. This means that you must double your efforts to save money so that you can clear your outstanding debt with relative ease. One way of achieving this goal is to revisit your household budget and cut corners where possible. By reducing everyday expenses and curbing impulsive shopping, you can create wiggle room in your monthly budget to repay a greater amount of your total debt each month.
Carry Out a Credit Card Balance Transfer
One way to consolidate your credit card debt is to do a credit card balance transfer. Balance transfer credit cards come with a pre-determined 0% interest period or offer nominal rates for an initial period. By transferring your debt to this new, low-interest credit card, you can tackle your outstanding dues at a lower cost. When considering this option, make note of the processing fees and the period for which you will obtain a nominal rate to ensure maximum benefits.
Opt For a Top-Up On Your Existing Home Loan
Another way to get cost-effective financing is to apply for a top-up on a home loan that you are currently servicing. These top-up loans have an affordable interest rate and give you access to a substantial amount too. Best of all, you can use a top-up loan for any purpose, including consolidating debt. Since top-up loans are linked to your home loan, they’re easy to apply for, require minimal documentation and come with a long repayment tenor that results in low EMIs.
Borrow Money By Leveraging An Asset
In the event that you own a valuable asset that’s not in use, consider using it as security to obtain the amount you require. This option allows you to retain ownership of your asset while securing the money you need to consolidate your debt in one go. You could choose to pledge anything from FDs and mutual fund units to gold, cars and commercial or residential property that you own.
Avail a Personal Loan To Consolidate Debt
The simplest solution however, is to take a personal loan for credit card debt consolidation. Loans like Bajaj Finserv’s Personal Loan offer you substantial financing, up to Rs.25 lakh for a 12- to 60-month tenor, without collateral. With simple personal loan eligibility criteria and minimal documents required, it’s an easy way to avail the amount you need at some of the lowest personal loan interest rates in india.
Moreover, the Bajaj Finserv Flexi Loan facility gives you the option to borrow from your sanction depending on your needs and pay interest only on what you use. You can also pay interest-only EMIs through the tenor and repay the principal later. This reduces your instalments by up to 45%.
To avail a personal loan for credit card debt even quicker, check your pre-approved offer from Bajaj Finserv. Doing so gives you instant approval and hastens disbursal so that you make clearing debt fast and cost-effective.