Nikhil Kumar
I've made 100s of financial sins and when I decided to get my life together, I started learning about Personal Finance. I've read 100s of Books and have watched hours of videos. Here, I will share my mistakes and learnings with you.

How to Get Rid of Credit Card Debt in India – 7 Easy Steps

In 2018, I had maxed out my 4 credit cards on my startup expenses. The very thought the debt was haunting me every night before sleep. These questions wouldn’t let me sleep at night – how to get rid of credit card debt, how to clear these debts easily, how to pay them off completely. 

Like most of us, I entered this question on Google. I did read many blogs, watched YouTube videos. Most of them were too generic (but highly informative).

Before we talk about the solutions about getting out of credit card debts, let’s see some facts:

  1. The average interest rate in Credit Cards is around 35-40% in India.
  2. Paying-off minimum dues won’t help you. If you use your credit card for Rs. 100000 and pay only minimum dues, it will take up to 3 years to get out of the debt completely.
  3. Non-payment and late payment will impact your Credit score which reduces the chances of getting a loan in the future.
  4. Banks outsource their recovery to third parties and hence, banks don’t take complete responsibilities of harassments.
  5. Interests from loans and credit cards are the major source of revenues for banks.

Now the big question, How to Get Rid of Credit Card Debts:

Note: I’m assuming that you have a stable source of income now. You have been in a really bad situation a month before and you have skipped a couple of dues. Even if you working and paying only minimum dues, you can learn a lot from this:

1. Understand you are not alone

We humans have a mindset of feeling good when we find out others also have the same problem as ours.

However, being in a credit card debt isn’t something to be proud of, but you need to know that it’s very common and you’re not alone.

Due to bad financial education, we are never taught about interest rates, debts, and personal finance. This is the main reason people fall into these traps.

2. List Down your Credit Card Dues

If you have multiple credit cards, write in your diary or excel sheet to know how much you actually owe.

Now, write down how much is the minimum due you have been paying till now (Generally it is 5% of the Total Due).

Now write the maximum amount you can allot to the monthly payment (as per your salary and other expenses) and make sure you keep it at least 2x of minimum due. Something like this:

table illustration for getting out of credit card debt

If your salary isn’t enough to pay 2x of the minimum due, you shouldn’t have spent so much in the first place. But, mistakes happen.

Just keep the payment amount slightly more than the minimum due.

3. Contact the Bank (Not Recovery Agents)

Yes, do that!

I used to think banks as money-eating monsters (which they are in most of the cases) but when I contacted them to see if they help, it actually worked!

In total, I got a pending amount reduced by 8000-10000 Rupees (Interests & Extra Charges).

Why are we contacting the bank?

Credit card debt comes with a lot of extra charges, especially if you have not paid for a couple of months.

One reason is to try our luck if they can waive off our extra charges. Another reason is to convert our whole due to an EMI.

I’m suggesting EMI as it will have a lot lesser interest rate than the regular interest of Credit Card.

I tried my luck with all the 4 banks I owed. HDFC never picked up the phone, ICICI suggested me to pay the minimum due first and then visit the main branch in Bangalore as they were not able to help over the call or Emails.

Kotak Mahindra Bank was extremely helpful and they reduced charges up to Rs. 5000 and converted my dues into EMI. IndusInd Bank reduced my charges by 4000 Rupees.

Basically, it all depends on your negotiation skills, seniority of the support agent you are connected with, and his/her authority. Here’s my Email I did write to IndusInd Bank:

email to get rid of credit card debt

In the first reply, they denied my request saying that all the charges are as per terms. Then I replied by requesting once again and promising to pay on time hereafter. This was their response:

email response reducing credit card debt

Hence, I saved Rs. 4000 from Indusind Bank. As they couldn’t convert my dues into EMI, I continued to pay Rs. 7000 as per my table.

In 10 Months, I was almost at closing this debt.

4. Understand Need Vs. Want

You have to do this step 1 day before your salary.

Take out your bank statement and filter your spendings by Needs (Which is must like house rent, grocery, office commute) and Wants (Movies, Newspapers, Alchohol).

You will be shocked.

But don’t confuse want with need. Filter smartly. Find that magic spot and take control of your wants.

need vs want magic spot

 5. Payoff your Dues on Payday

Once you receive that salary credit notification, transfer 10% of it to one of your savings accounts which you don’t use for unforeseen situations.

In my case, I had opened a new bank account and have opted only for the cheques – no debit card, no internet banking, and no mobile banking so that I don’t take out that money easily.

Then pay-off your credit card dues. No matter if your due date is on the 5th or 10th. Just pay it off. That’s not your money!

Just give it back!

Then try to live with limited money for the whole month. Don’t spend too much on “wants”. Now whatever you’re left with one day before the salary, divide between the cards and pay equally in excess. Repeat this for a couple of months.

Meanwhile, DON’T EVEN TOUCH YOUR CREDIT CARD! I gave mine to my Dad so that I don’t swipe it.

6. Pay Dues on Time

Now that you have promised the bank that you are going to pay on time, you must do the same.

If things go down again, you will have proof that you pay in a disciplined way and they will consider your requests.

Just in case things get bad really bad, and you’re unable to pay the upcoming due, pay it off with the 10% we have been saving in our special account. Remember?

Even minimum due works. But get back in the game as soon as possible and try to clear the debt.

7. Get out of the Debt

If you follow the above steps, I’m sure you will get out of your credit card debt.

And, Congratulations! You completed this milestone. If you have multiple credit cards, allocate the completed card’s money to other credit cards equally.

This may take a lot of time depending upon your outstanding balance and your salary. But you have to keep calm and do your deed by paying your credit card dues on time.

You may gain some financial literacy by reading books and you can also check out my other post about laws of wealth.

Once you’re out of all the debts, try saving some money, and create an emergency fund. Also, invest your money wisely.

I wish you get out of credit card debt soon.

Do you have any other tips to add? Let me know in the comments.


Nikhil Kumar

A personal finance enthusiast. I've made 100s of financial sins and when I decided to get my life together, I started learning about Personal Finance. I've read 100s of Books and have watched hours of videos. Here, I will share my mistakes and learnings with you.

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1 Response

  1. Shivam says:

    Thanks for summing all the information in one article and collecting all the essentials points your read from various articles :).
    P.S: I am not in debt but I was going to take credit card but this is a precaution for me. DEBT is a four work letter that should be kept away from personal life.

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