How to manage credit card loans?
Posted on: 20/Apr/2020 3:54:27 PM
It is being continuously emphasized to be cautious about using credit cards!
If a person does not recognize and understand the important aspect the credit cards are short-term use facilities, the credit card usage may turn out to be (huge) debt burden!
Here are some hints about managing the credit card in the recent lockdown situation:
EMI (Equated Monthly Instalments): Due to the raging coronavirus pandemic and the preventive action against the spread of the lockdown imposition, the opportunity of holding the debt for 3 months has been given. This will apply to a credit card as well.
However, one should think in detail before using this facility for credit cards - the main reason is that the interest rate is higher!
Though one can postpone payment for the months of April and May, interest will accrue for this period! So, this interest has to be paid along with the amounts due! The compound interest applicable to the due payment may increase considerably as compared to normal!
Additional Burden: It may appear that delaying the payment of EMI is equivalent to paying the minimum monthly amount. However, if new items are bought using the credit card during this period, the interest will start accruing fort he amount spent on the new purchase! So, it will increase the debt burden!
Special Conditions: It is better to analyze the conditions for this concession. They inform that some private banks set the limit the purchases done through credits card during this concession period. However, problems may arise when there is a real necessity to use the credit card!
Debt Burden: As the interest rate for the credit card loan is normally higher, any failure to make due payments will create this extra interest issue. This may lead to taking more loans! So, if one can somehow manage the shortage of money, it is better not to delay the EMI payment and pay as per the bill on time!
