Huge credit card bill or loan? 5 ways to quickly clear your debt - How to get out of the debt trap (2024)

Table of Contents
How to get out of the debt trap Start with paying off high-interest debt quickly Switch to EMIs Increase repayments when income rises Minimise your expenses Seek help if needed

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Huge credit card bill or loan? 5 ways to quickly clear your debt - How to get out of the debt trap (1)

Getting out of a debt trap could be difficult. Here are five ways how to pay off your debt, even when it seems impossible.

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Start with paying off high-interest debt quickly

If you have a lot of debt, decide which loan needs to be paid off first. This will help you to minimise interest paid on all loans.

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Your priority should be to get rid of high-cost loans such as credit cards outstanding. Do remember that if you roll over payments, the interest that accumulates might reach 35 per cent annually. Convert the balance of your credit card debt into manageable instalments if you are having trouble paying the whole bill. Do make sure that you don't miss any EMI at that point.

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Increase repayments when income rises

The fastest way to pay off your bills is to increase repayments when income increases. You can try to hike the EMIs by 5 per cent if your source of income jumps. This method will reduce your interest repayments significantly and help you to pay off your debts faster.

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Minimise your expenses

You will be able to pay off your debts more quickly if you cut some of your discretionary costs. Avoid ordering food frequently, cut down on going out every weekend and eating outside, and cancel the gym membership or OTT subscription that you hardly use, said experts. Eliminating all miscellaneous expenses in one go can be difficult, so try to reduce them to the bare minimum.

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Seek help if needed

If you find it difficult to manage your debt, do seek expert assistance. A debt management counsellor will negotiate with your creditors to accept a single, lower monthly payment. Some NBFCs also lend to people who can pay back even if their credit score is low because of a default. You may approach and negotiate with such NBFCs to grant loans at reasonable interest rates.

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Huge credit card bill or loan? 5 ways to quickly clear your debt - How to get out of the debt trap (2024)
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