Credit Card Dues: Several new-age Fintech companies offer Credit Card Takeover Loan that can help you clear the long-pending credit card dues and help maintain the CIBIL score.
Credit Card Outstanding: When one spends too much on credit card and fails to clear the entire outstanding amount by the due date, it is very likely that the credit card holder may soon fall into a debt trap. If the individual has another card, chances are he or she starts swiping the other card. In a few months, there could be outstanding dues on one or more credit cards and the situation may go out of control. The fallout of such a scenario is not only about paying a monthly interest rate of almost 3.5 per cent on the credit card bill but also the negative impact on your credit profile and credit CIBIL score. It’s always better to pay the entire dues by the due date and avoid rolling over the outstanding amount.
Several new-age Fintech companies offer Credit Card Takeover Loan that can help you clear the long-pending credit card dues and help maintain the CIBIL score. But, what are Credit Card Takeover Loan “Credit Card Takeover Loans are very similar to personal loans, where a loan seeker gets the loan amount into his account and can use the entire money to pay different debts. These are short term loans that usually range from Rs 50,000 up to Rs 2 lakh and the repayment tenure offered is 12 months,” informs Satyam Kumar, CEO and Co-Founder, LoanTap.
Being a personal loan, the rate of interest is less than what one pays on the credit card outstanding amount. “On credit cards, the borrower pays 3-4 per cent monthly interest, while in credit card takeover loans it’s about 1.5 per cent monthly interest which is almost half the amount payable,” says Kumar.
But, if a credit card holder has more than one card, the Balance Transfer facility in credit cards could be of use. In Balance Transfer, the dues on one card are transferred to another credit card at a lower rate of interest. Remember, the dues of the 1st card is paid in full by the 2nd card issuer but the dues still remain. The outstanding amount will now reflect in the bill of the 2nd card.
However, in Balance Transfer, the interest rate charged by the 2nd card issuer is less than what is charged by card issuers on purchases. “A balance transfer facility, generally serves the option to transfer one’s debt or credit card outstanding of multiple credit cards to other credit card. However, balance transfer of single card can be done and balance transfer facility generally comes with processing fees,” says Kumar.
An alternative of Balance Transfer is the Credit Card Takeover Loan as it may help you clear dues on one or more cards in one go. Remember, only when the dues are paid in full, one is eligible for the interest-free days available in credit cards. If you opt for Credit Card Takeover Loan, ensure to repay it on time and going forward, manage credit card spending in a better way to avoid any interest payments.