Credit cards used without careful consideration are a sure-shot way to a debt trap. If used smartly, credit cards can cater to your financial needs and allow you some breathing space when it comes to money management.

Credit cards are a financial solution that can assist us in our purchases and financial problems. As the market is flooded with a wide range of credit card offerings by major banks, today it is easy to pay for anything and everything with a credit card.

However, it can easily become a liability if used without thought. Large credit card bills that are unaffordable can easily entrap one in a credit card debt cycle. This can lead to huge financial troubles before you know it. 

If you are currently facing a credit card debt trap, here are some smart ways to reduce and repay your credit card dues.

  1. Balance transfer to lower credit card dues

A balance transfer facility is mostly used for shifting any outstanding dues on a credit card to a low-cost EMI option. Through this method, you can shift from one or multiple high-interest credit cards to one card that offers lower interest charges. This can also help you to avail a renewed credit-free period of up to 90 days. This depends on the credit card provider or bank’s terms. Some banks may allow more time for repayment without additional interest on dues.

  1. Snowball method for paying off credit card dues

Using the snowball method, a cardholder can pay off the credit card dues in a phased manner. This helps in easing the debt burden while repaying the dues. One can begin by clearing off smaller dues first. Clearing the entire balance of one card can also improve credit score while bringing down the credit utilization ratio.

Related: Is it bad to be in credit card debt?

  1. Using a personal loan to pay credit card dues 

This may not be ideal for those who are in a heavy debt trap. However, cardholders can still use this option to clear their dues. The interest rate on most overdue credit cards may go up to 36 – 40% annually. Using a personal loan, one can clear off the credit card dues with a lower rate of interest ranging from 11 to 24% per annum.

Related: Ways in which you can clear credit card debts faster

  1. Top-up loans

These can be used by cardholders to clear credit card dues. This option is meant for those who have an existing home loan. Top-up loans can be availed by borrowers who have been regular in repaying their home loan consistently for more than 2 years. After applying for a top-up loan, the bank/loan provider may do due diligence on the property. Upon approval of the loan, the amount can be used to pay off credit card debt. The top-up loan interest rate is similar to that of home loans. 

  1. Liquidating investments

Ideally the last resort, this option can be considered by investors who are unable to come out of the credit card debt by any means. To come out of a credit card debt that charges 36 to 40% interest per annum, one may have to forego the interest earnings on investments. One must go for liquidating low earning investments like FDs to come out of credit card debt. 

How to use a credit card smartly?

As for advice for the future, it is always sensible to chalk out a budget that includes credit card payments. This can help in making purchases only as per the available budget. Approaching expenses through a budget can allow you to pay off your credit card bills in full without pushing it to the next month or getting into a debt trap.

Essential payments such as rent, groceries, telephone, water bill, wifi, etc can be made using a credit card. Since these are important monthly outflows, they have to be paid regularly. This also allows you to follow a budget and stay on track.

For major expenses such as annual vacations or buying expensive products, you must first sort out your finances and then incorporate them into your budget. Book flight tickets or making hotel bookings through a credit card can be beneficial since there are many offers and discounts on these. Accumulating sufficient air miles can also allow you to get flight tickets using the miles instead of paying for them.


These are some smart ways in which you can clear your credit card debt faster and avoid getting into a debt trap. The faster you clear your dues, the lesser chances of having a low credit score and poor credit report. Therefore, work towards incorporating a financial discipline of making timely payments and spending only as per your affordability.

FAQs - Easy Ways to Reduce & Repay Your Credit Card Debt

  1. How can I clear my credit card debt fast in India?

To clear your credit card dues fast, you must begin prioritising your expenses after setting up a monthly budget. Always ensure to pay off the minimum balance due and switch to cards with low-interest rates Converting dues to EMIs is another way to quickly pay off the dues.

  1. How can I legally get rid of my credit card debt?

Cutting down on your expenses can help you get rid of your credit card debt faster. Begin by paying off the smallest balance first and try to increase your earnings to pay off the debt faster.

  1. How can I get money to clear my debts immediately?

If you are in deeper debt troubles, you can sell off some of your low-interest investments to pay the outstanding debts. Try to settle the expensive debt first and avoid adding additional credit.

  1. How much debt should you carry?

It is ideal to have a maximum debt of 36% of your total income at any point. This will help in easy repayment of the same.

  1. Is it bad to have zero debt?

If you have no debt, your credit score and overall financial health can be very good. However, if you have never used debt, it could also mean that your credit report does not exist and you may find it difficult to source a loan or credit shortly.

  1. Is it safe to use a credit card in India?

Yes, using credit cards is safe in India provided you do not share confidential information including passwords with anyone. Credit cards can also help you in establishing a credit score and credit history over time. 

  1. What are the disadvantages of credit cards?

High-interest rate on delayed payment of credit card dues is one of the biggest disadvantages of credit cards. Some banks may even charge enrolment fees and annual maintenance fees which could be substantial.