Clearing credit card debt: a repayment plan that ends

Pay a statement in full and you pay no interest. Carry any part of it and interest applies, usually from the transaction date, and the interest-free period on new spending is withdrawn until the balance is cleared.

The minimum due is normally around 5% of the outstanding. On a ₹2,00,000 balance at 3% a month, interest alone is about ₹6,000, while a 5% minimum is ₹10,000 — so only ₹4,000 reduces the debt in month one, and the minimum falls as the balance falls, stretching repayment for years.

A fixed monthly amount that comfortably exceeds the monthly interest is what makes the balance fall predictably. Work out the interest first — balance × monthly rate — and commit to clearly more than that.

• Convert the outstanding to an EMI plan with the card issuer: often 13–18% a year, far below revolving, though a conversion fee and GST usually apply.
• A personal loan at 11–16% used to clear the card, provided the card is then not used to revolve again.
• A balance transfer to another card at a promotional rate, counting the transfer fee and knowing what rate applies after the promotional period.
• A secured option such as a gold loan or a top-up on an existing loan, accepting that you are putting an asset behind unsecured debt.

With more than one balance, pay every minimum and EMI, then direct all spare money to one target loan. Highest rate first — the avalanche method — saves the most interest, and cards almost always sit at the top of that list. Smallest balance first — the snowball method — clears accounts faster and can be easier to sustain.

Whichever order you pick, roll each closed account's payment into the next target. That rollover is what turns a slow plan into a fast one.

• Stop new spending on the card you are clearing; set up autopay for the full statement once the balance is gone.
• Move the due date near your salary date so a full payment is always possible.
• Never take cash advances — interest starts immediately and a fee applies.
• If repayment is genuinely unaffordable, talk to the issuer early about a restructured plan rather than defaulting.

The multiple loans planner takes your cards and loans together, applies avalanche, snowball or cards-first ordering, rolls freed-up instalments into the next debt and shows a single debt-free date for all of them.