While serving as one of the most preferred financial tools, credit cards can also accumulate significant dues, if not managed appropriately. Several users find their monthly credit card payment challenging, and thus, at first, borrowers should understand how this debt tool works to manage the payment instrument properly.
Every credit card comes with a billing cycle, along with a fixed date to receive a monthly statement of all card details, including transactions made, charges levied, etc. This monthly statement also displays the total, and minimum amount due that needs to be paid before a set due date. The time frame between the start of a billing cycle and its corresponding payment due date is interest-free and is called the grace period. Therefore, if borrowers can clear their total dues within this grace period, no interest is charged on credit card utilisation.
Now, the following are some tips that can help card users to get rid of card debts easily.
Convert dues into EMIs
If borrowers find it difficult to repay the entire outstanding amount, they can consider requesting their card issuer to convert the outstanding amount into EMIs for a particular period, say 3 to 12 months. Credit card bill payments through monthly instalments can save a significant amount on interest accrual and reduce the total pay-out as well.
When borrowers carry a balance, the outstanding amount attracts interest from the beginning of the new billing cycle. As the credit card interest rates are considerably high, the remaining dues can turn to be a never-ending debt. Nonetheless, in the case of EMIs, individuals can easily meet the total pay-out from the beginning. They should thus plan repayments accordingly.
Pay the total bill
Another way to manage credit card payment is by paying the total monthly bill amount instead of the minimum amount. Once the entire due is paid before the due date, financiers cannot levy any interest. Borrowers also do not need to pay any additional amount as penalty fees. If the total bill is difficult to pay at once, individuals should try to pay more than the minimum due to minimise interest accrual.
Look for a balance transfer
A balance transfer is an added benefit that allows borrowers to transfer their outstanding from one card to another to repay their credit card debt. Once the balance is transferred to another account, this new card can provide an interest-free period of up to 90 days based on the card issuer opted. If users can repay the total amount within this stipulated time, they can save from paying any additional expense as interest.
Enable automated payments
As already mentioned, late payments on credit cards also invite substantial penalty charges. So, borrowers should always ensure a timely repayment. To ensure that they do so, they can send standing instructions to their financial institution for automated and timely credit card payment. This way, they can avoid delaying due payment.
Maintain the utilisation ratio
Depending on the financier selected and borrowers’ eligibility, each card holds a specific sanctioned amount called credit limit that users can spend. However, utilising making out the credit limit can damage the user’s credit profile and decrease his/her creditworthiness considerably.
Such reckless spending can also cause troubles when borrowers have to repay the amount by the due date. So, if cardholders can maintain their credit utilisation ratio, i.e., the percentage of credit used as against the available limit, below 30%, they can efficiently manage their credit card payment as well as financial profile.
Also, individuals can use affiliated reward programs to reduce the overall expenditure, which subsequently helps in monthly bill payments by limiting the total amount due. They can thus look for cards that bring attractive reward programs for every transaction.
The NBFC also comes with pre-approved offers to make the approval process simpler and faster. These offers are available on several financial products, including credit cards, business loans, and personal loans. Applicants can look at their pre-approved offer by entering their names and mobile numbers online.
Thus, above all, borrowers need to be careful and responsible about their expenses to organise their credit card payment and optimise financial management. For convenience, they should know the ways to make credit card online payments, so they never miss one.