Debt cut strategies useful for borrowers but they come at a cost

Loan restructuring and moratorium increase interest outgo

Households in India are under higher stress currently, with household debt-to-gross domestic product ratio rising from 32.5 per cent in 2019-20 to 37.3 per cent in 2020-21, according to a report by State Bank of India. Households should consider deploying one of the debt-management strategies outlined below to extricate themselves from their predicament.  

Consolidate your debts

Here, the borrower takes his multiple, usually high-cost loans and converts them into a single, lower-cost loan. Expensive, unsecured loans and card outstanding are usually converted into a single, collateral-backed loan.

Says V Swaminathan, CEO, Andromeda & ApnaPaisa: “The cost of your debt declines.