Replace Credit Card Minimum Payment with EMI Free Loan
Published on : September 08, 2016

A lot of people become too comfortable making minimum payments on their credit card bills. This is largely due to the prevalent delusion that making minimum payments is enough to prevent late fees and interest charges. Even banks don’t like to provide information on the damage minimum payments could do in the long run, at least until not specifically asked. The lack of awareness is causing credit card holders lose money that they could easily save. If you would like to learn about minimum payments and how they affect your payments, then keep on reading.

What is Minimum Payment?

The minimum payment is a portion of the total outstanding amount that is due. For most banks, it is 5%.So, for instance, if the outstanding amount that is due on your credit card for a particular month is Rs. 20,000 then the minimum payment would be Rs. 1,000.

There are many misconceptions among the credit card users of India regarding minimum payments. It is widely believed that interest is not charged on your credit card as long as you make the minimum payment. This is not true, at least for the majority of banks. The only benefit you get by making the minimum payment is that you don’t have to pay late fees. The interest, however, is charged nevertheless. The only way to escape the interest is to pay the full bill.

Interest on Credit Card Loans

Sticking to minimum payments for a prolonged period can give rise to a huge debt that could even exceed your credit limit. This is on account of the interest that is charged on credit cards. Generally referred to as APR (Annual Percentage Rate), the interest on credit cards is quite high. For instance, the APR of SBI is 40.2, and that of Axis bank is 46.78. So, the average interest on your credit card would be around 3-4 percent a month, which may sound insignificant but, in the long run, can pose a challenging financial problem.

When you play safe by making only the minimum payments on your outstanding bills every month, you end up giving rise to debt. This is because the higher the pending amount, the higher will be the interest amount. Taking the example mentioned above, if you pay Rs. 1,000 (minimum payment) on the outstanding amount of Rs. 20,000 from last month and your current month’s outstanding amount is Rs. 6,000, then the combined pending amount would be Rs. 19,000 (from last month) + Rs. 6,000 (from current month) + APR charged on the amount carried over from last month(Rs. 19,000).

What is Credit Card Takeover?

When the pending amount on your credit card has increased significantly, a Credit Card Takeover (CCT) can be the perfect solution for you. LoanTap offers easy repayment Personal Loans that you can pay off in 3-12 months. Since these loans have a lower interest rate than your credit card’s, you can use them to pay off the pending debt on your card.

LoanTap’s EMI Free Loans are perfect for paying off debts such as credit card debts in situations where you have huge cash inflow coming in future. In an EMI-free loan, you don’t have to pay monthly EMIs. Instead, you only have to pay the interest on the loan amount. You can pay back the principal amount as per your convenience in partial payments. The interest amount can easily be as low as 40% of the amount you would usually pay as an EMI for the same loan.

How Does Credit Card Takeover Help?

A Credit Card Takeover can help you in more ways than you can think. Unfortunately, many people are not aware of its benefits and end up losing money as well as their CIBIL score.

Here are a few ways CCT can help you when you have to take care of a huge credit card debt-

  1. Lower Interest Rates

    A CCT loan has a lower interest rate in comparison to the interest rates on credit cards. Thus, you directly save a lot of money which you would otherwise pay in the form of higher interest. A CCT loan’s annual interest rate is generally around 18% lower than the credit card interest rates.

  2. Convenience

    If money is tight for you then an EMI- Free Loan can be of incredible help. With it, you don’t have to worry about paying the principal amount as you are free to wait until you are ready. You only have to pay the interest on a monthly basis, which is easily affordable. When you are in a better financial position, you can finally pay off the principal amount.

  3. CIBIL Score Protection

    One of the most important advantages of using CCT is that you can save your CIBIL score from taking any blows. Delayed credit card payments can often have a negative impact on your CIBIL score, which you simply can’t afford. With a poor CIBIL score your chances of loan approvals become low and making the necessary repairs could take a lot of time and energy. Thus, you should take all possible measures to avoid any CIBIL score damage. However, if you are unable to pay off the debts, what are you supposed to do? Well, now you can take an EMI-free loan and save your CIBIL score by using the loan for dealing with the debt.

  4. No Late Fees and Penalties

    With a CCT loan you can also avoid late fees and penalties. Since the loan can be obtained within a matter of days, you can save a lot of money on late fines and penalties, which are generally quite high.

EMI-free loans are becoming more and more popular due to the kind of flexibility they provide. You can use an EMI-free loan for any purpose- buying a house, paying your college fees, or even for financing your marriage. With an EMI-free loan, you have minimum pressure and are free to pay the principal amount whenever you are comfortable. You only have to pay small interest on a monthly basis till the maturity of the loan.

EMI-free loans are helping people lead a more convenient life, and you can also get one and enjoy the benefits. Get an estimate of your loan eligibility today with the help of LoanTap.

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