I have total 9 credit cards and have outstanding of 16 lakhs for that I am paying only minimum due for last 2 months with great difficulty. If I don't pay even minimum due for next 3 to 4 months will I be arrested and sent to jail. If arrested how many years of prison or is there any other legal proceedings the credit card providers will do . I need complete and correct answer please?

Ans: Mr. Sam. I appreciate that you took action to pay your outstanding credit card dues. Let’s address your concern step-by-step and analyse the potential penalties and interest charges you might face for the delayed payment.

Understanding Credit Card Late Payment Charges
Since your credit card due date was on 31.10.2024, and you made the payment on 04.11.2024, there is a delay of 4 days.

Most credit card companies, including SBI, charge a late payment fee if payments are not made on or before the due date. Additionally, interest charges are applied on the outstanding amount.

The fees and interest can add up quickly, especially if the outstanding amount is significant, like your balance of Rs 48,000.

Let’s break down the potential charges you could face and how they are typically calculated.

Late Payment Fee
Credit card companies usually charge a fixed late payment fee based on the outstanding balance.

For an outstanding balance like yours (Rs 48,000), the late payment fee can range between Rs 750 to Rs 1,300.

The fee depends on the bank's specific policies, so you may want to check your credit card terms or contact customer service for the exact amount.

Interest Charges on Outstanding Dues
Credit card interest rates can be quite high, typically ranging from 3% to 4% per month, which translates to an annual rate of 36% to 48%.

Since you missed the due date, the interest will be charged on the full amount of Rs 48,000 from the billing date, not just the delayed period.

Additionally, interest will also be charged on any new purchases made until the payment is fully cleared. This is known as the revolving credit interest.

Potential GST Charges
In addition to late payment fees and interest, GST (Goods and Services Tax) of 18% is applied on both the late fee and the interest charges.

This means that your overall charges will increase slightly due to this additional tax.

Summary of Expected Charges
Late Payment Fee: Approximately Rs 750 to Rs 1,300 based on your outstanding balance.

Interest Charges: Calculated on the outstanding amount of Rs 48,000 at a rate of 3% to 4% per month.

GST: An additional 18% on the total of late fee and interest.

Immediate Actions to Minimise Future Charges
Pay Off Dues Quickly: If possible, try to pay off any remaining balance immediately to stop further interest accumulation.

Contact the Bank: It may be worth calling the SBI customer service and explaining your situation. Sometimes, banks waive late fees for customers with a good payment history.

Set Up Auto-Debit Facility: To avoid missing payments in the future, set up an auto-debit from your bank account for at least the minimum due amount.

Monitor Your Statements: Regularly check your credit card statements to avoid any surprise charges. It’s crucial to stay on top of payments, especially during festive or busy periods.

Long-Term Strategies to Avoid Debt Trap
Credit cards are convenient but can lead to debt if not managed carefully. Here are some suggestions:

Clear Dues in Full: Always aim to clear the total due amount by the due date. Paying only the minimum due will result in accumulating interest on the remaining balance.

Avoid Making New Purchases on Credit: Until you clear your dues, try to avoid using your credit card for new purchases to prevent additional interest.

Emergency Fund: If possible, build a small emergency fund to handle unexpected expenses. This way, you won't have to rely on credit cards.

Use Debit Cards for Everyday Expenses: To reduce your dependency on credit, use a debit card for regular purchases. This will help you manage your expenses better.

Some Final Insights
Credit card debt can quickly spiral out of control if not managed properly. The key is to act promptly and clear your dues to avoid paying hefty fees.

Late fees, interest, and GST charges can add up, making it essential to pay attention to due dates. Even a few days' delay can be costly.

By taking proactive measures and maintaining discipline in payments, you can avoid future charges and keep your finances in good health.

If you are struggling with managing debt or financial planning, consider consulting a Certified Financial Planner to guide you towards better financial management.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: You are 28 years old with a salary of Rs 40,000 per month.

You have a personal loan of Rs 3.6 lakhs.

You also have credit card outstanding of Rs 8 lakhs.

You do not have any investments or other liabilities.

This situation feels stressful. But with right action, you can come out of it.

Let us now look at your issue from a 360-degree view.

1. Understanding Your Debt Structure

You are carrying two kinds of loans — personal and credit card.

Personal loan is structured. Fixed EMI and tenure.

Credit card dues are open-ended. Interest is very high.

Personal loan interest is about 12–15% usually.

Credit card interest is 36–48% yearly. This is extremely expensive.

The interest keeps increasing monthly if not paid in full.

Credit card debt is unmanageable if not controlled quickly.

Currently, your highest priority is credit card repayment.

Focus on reducing credit card debt first, not personal loan.

But you cannot ignore personal loan EMI also.

So balance is needed between the two.

Understand your total monthly repayment capacity.

This is the starting point of your recovery.

2. Analyse Your Monthly Budget in Detail

Your salary is Rs 40,000. First track all monthly expenses.

Write down every rupee spent — rent, food, transport, recharge.

Identify non-essential spending — like online shopping, food delivery, OTT.

Stop or pause all non-essential expenses immediately.

Keep expenses only for basic needs and EMIs.

Create a lean budget. Stay strict for next 24 months.

This sacrifice is temporary but necessary.

Try to save at least Rs 5,000–Rs 8,000 every month.

This saved amount will help in debt repayment.

Avoid using credit cards from now on. Cut them physically if needed.

Don’t use them even for emergencies. Find alternatives.

3. Your Current Repayment Capacity and Debt Burden

Your personal loan EMI must be around Rs 17,000 per month.

You may be paying minimum dues on credit card.

But this minimum amount only covers interest, not principal.

So credit card balance does not reduce. It grows every month.

Total debt is Rs 11.6 lakhs. But credit card is a big danger.

Your EMI burden is above 45% of your income.

This is very high for your income level.

There is urgent need to restructure or reduce this burden.

4. Take Help of Loan Consolidation Strategy

You must consolidate your loans now. This will reduce your interest.

Go to your bank or NBFC. Ask for personal loan top-up.

Try to get a loan of Rs 8 lakhs at 12–15% interest.

Use this to fully close the credit card debt.

You will then have only one EMI to manage.

Interest will reduce from 48% to 15%. Big relief.

Ask for 5-year tenure. This will reduce EMI pressure.

Even though you pay longer, total interest will be lower.

Do not hide your situation from the bank.

Show stable salary slips. Maintain your CIBIL score.

Try with your salary account bank first.

If they say no, try other NBFCs or banks.

Don’t go to loan apps or unregulated lenders.

Always go through formal financial institutions.

5. If Consolidation Fails, Go for Debt Settlement Negotiation

Sometimes, banks don’t give fresh loan if CIBIL is low.

In such case, approach the credit card company.

Speak openly. Tell them you are not able to repay fully.

Ask for one-time settlement.

They may waive off penalties and offer 20–30% discount.

This will hurt your credit score. But it helps reduce pressure.

Pay the negotiated amount in full. Then take NOC.

Keep written records and acknowledgement.

Be careful. Don’t get trapped by fake debt settlement agents.

Go through the official helpline of your credit card bank.

This is not the best route. But needed when things are tight.

Try settlement only if consolidation or refinance fails.

6. Find Additional Income Sources to Accelerate Repayment

Rs 40,000 may not be enough to handle such large debt.

You must try to increase your income.

Look for freelance work, weekend jobs, tuition, or online skills.

Even Rs 5,000 extra per month helps.

Sell unused items at home — gadgets, furniture, old phones.

Use this extra income only to reduce debt.

Avoid using it for spending. This requires mental discipline.

Work more now. Relax later.

Every extra rupee should go towards debt closure.

7. Avoid These Mistakes During This Period

Don’t apply for new credit cards or loans now.

Don’t ignore credit card bills. Minimum payment won’t help.

Don’t do balance transfer from one card to another.

Don’t use salary advance apps. They create more problems.

Don’t fall for “pay later” or EMI offers on shopping sites.

Don’t withdraw PF or life insurance funds.

Don’t ask friends for loans unless very close.

Focus on discipline. Not on short-term relief.

8. Build an Emergency Fund After Clearing Debt

Once your credit card and personal loan are paid, start savings.

Keep at least Rs 25,000 as emergency fund.

Don’t invest this money. Keep in liquid mutual fund or savings.

It protects you from going back into debt again.

Emergency fund is the first step in financial recovery.

Don’t touch it unless very necessary.

Keep adding Rs 1,000 every month after loan closure.

You will slowly build stability.

After that, start monthly investments. Even small SIPs are good.

9. Plan for Long-Term Financial Stability

You are only 28 years old. Time is on your side.

Learn basic money management. It will help forever.

After clearing loans, start investing for future.

Begin with actively managed mutual funds through a CFP-backed MFD.

Don’t go for direct mutual funds.

Direct funds give no guidance, no handholding.

At this stage, support is more important than low cost.

Regular funds through CFP-backed MFD offer better discipline.

You also get help in rebalancing and taxation.

Avoid index funds.

Index funds only copy markets. They can’t protect from big falls.

You need actively managed funds. They offer better strategy.

After debt is closed, invest with clear goals.

Start with small SIPs, then increase slowly.

Set goals like emergency fund, retirement, buying car, etc.

Review every 6 months. Don’t invest blindly.

Mutual funds are powerful. But only if used with care.

10. Credit Score and Future Borrowing Power

Your credit score will be affected now.

But you can rebuild it. Start today.

Pay all EMIs and bills on time.

Avoid cheque bounces or missed payments.

After loans are cleared, take a small secured credit card.

Use it monthly, and repay in full.

In 2–3 years, your score will improve.

Don’t feel bad. Many people go through this.

What matters is what you do now.

Change habits. Build better money control.

That is your real financial strength.

Finally

You are brave for facing your problem. That’s the first big step.

Rs 11.6 lakhs loan on Rs 40,000 salary is very tight.

But it is not impossible to overcome.

Stop spending. Start acting.

Try to consolidate your debt.

If not, negotiate settlement.

Pay credit cards first. Then personal loan.

Increase income. Cut lifestyle costs.

Don’t use credit again until recovery.

In 2–3 years, you can come out clean.

Then start savings, investments, and wealth building.

You are young. Life is in your favour.

But don’t delay action. Start from this month.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

Ans: Dear Sir,

Thanks for sharing your situation. I understand this must be stressful for you. Let’s break down what typically happens and what you can do.

Current Snapshot

Age: 23

Income: ?14,000/month

Debt:

Credit cards: ?2.25L

Third-party app loans: ?40k

Current situation: Unable to pay minimum dues due to family/medical emergencies

Observation:

You are facing a high debt-to-income ratio.

Non-payment of credit card and app loans can lead to harassment from lenders, increased interest, and legal action eventually.

What Can Happen

Interest & Late Fees

Credit card and app loan balances will increase due to interest and penalties.

Credit Score Impact

Non-payment will lead to low credit score, which will affect future loans, credit cards, or rental applications.

Collection Calls / Legal Notices

Lenders may contact you for repayment repeatedly.

If ignored for long, they can escalate to legal action.

Possible Legal Action

For unsecured loans (credit cards, app loans), lenders can file a case under civil court.

In extreme cases, banks may seek recovery through courts.

Important: For small debts, criminal action is rare, unless there is fraud.

What You Can Do

Do Not Ignore Communication

Answer calls and emails from lenders. Explain your financial hardship.

Negotiate Payment Plans

Many lenders offer settlement, restructuring, or EMI plans for financial hardship.

Ask for reduced monthly payments or temporary moratorium.

Prioritize Critical Payments

Start with the highest interest loans (credit cards).

Make small payments even if full dues aren’t possible → shows willingness to pay.

Avoid New Debt

Stop taking further loans or credit until current debts are under control.

Seek Professional Help

A debt counselor or QPFP/financial planner can help you restructure debt and negotiate with lenders.

Important Notes

You are not alone; many face debt due to emergencies.

Early action reduces stress, interest accumulation, and legal complications.

Maintain records of all communications with lenders.

Summary:

Debt will increase if unpaid → credit score drops, interest accumulates.

Harassment and collection calls may continue.

Legal action is possible if ignored, but typically lenders prefer repayment settlement.

Take early action, communicate, and restructure debt.
Best regards,
Naveenn Kummar, BE, MBA, QPFP
Chief Financial Planner | AMFI Registered MFD
https://members.networkfp.com/member/naveenkumarreddy-vadula-chennai