There are times when most of us are faced with a liquidity crunch; for some these times may be rare and for some they may be more frequent; nonetheless they can happen to the all. In such a scenario the credit card bill can appear like a huge burden. Credit card companies have a fixed deadline by which the payment needs to be made and not doing that has some unpleasant consequences. A delayed payment can put you on the CIBIL defaulter list and also attract severe penalties. Taking the route of paying the minimum amount could save your credit score but still you will have to pay the charges on the unpaid amount. And that turns out to be highly expensive way.
If calculated, it may take over 100 months to repay your debts on credit card where every month the minimum amount due (5%) is being paid and an interest of 3% is being levied on the outstanding amount.
We have come across questions if the outstanding on one card can be paid with another credit card. Well, the direct answer to this is No, but indirectly Yes! Read on to understand in detail.
Options for Paying Your Credit Card Dues:
Most card issuers allow the card holders various options to pay their card dues. One can make an online credit card payment, deposit cash at one of the designated branches or pay through cheques. In the online mode also one could transfer money from an account held in the same bank or from another bank account through direct debit, RTGS, NEFT etc. Amongst these options there is no way which allows one to directly charge another credit card for the payment of their dues.
The credit card companies do not allow this payment option owing the regulations enforced by the central bank.
Even if there was no regulation around it, accepting payment from other cards would have resulted in an overall fee of about 2%. Meaning that the credit extended by them would have attracted a loss of the amount paid in fees.
Explore the Balance Transfer Option:
This is way by which credit card can be used to pay the other card dues; albeit not directly. Balance transfer is a service that is offered by most card issuers. Here the card holder has the option of transferring the entire outstanding amount of card “A” to card “B”. The unpaid (transferred to card B) amount is then paid in installments at a lower interest then what would have been charged by the card company in case of a default. Banks offer different plans for balance transfer credit cards, the client can chose a tenure that suits him/her, and the interest rates varies as per the chosen tenure. Thus the card holder is relieved from the burden of the huge outstanding balance, he gets to pay a lower interest, and the amount can be repaid in easy installments.
However before this option is chosen, as always it pays to go through the fine print. Some card issuers may offer balance transfer schemes at no interest during the first three months. Thus if the borrower manages to repay within the first three months he/she could end up saving a big chunk. As the term progresses interest rates also increases, so assess your repayment capacity before choosing the term. Also be clear about the processing charges.
Taking cash advance on one card is also an option to pay another card dues but this is a very expensive option as cash withdrawals have a cash advance fee and interest charges that are exorbitantly high. So using this option is highly avoidable.
If you are falling behind on your card payments then exploring a balance transfer option could help you in debt consolidation and as well as help you keep your credit rating intact.
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