Why should You Not Delay Credit Card Payments

A credit card is the rescue option when you do not have enough cash for something; it is also a great friend when it brings rewards, discounts, and cashback. So, all you have to do is swipe the card or use it while making an online transaction. However, there also comes a time each month when you have to make the credit card payment. 

Now there are three ways in which you can make your credit card payment:

  1. Pay only the minimum due amount before the due date and carry the remaining balance from one month to another. 
  2. You can also choose to make the complete payment well before time. 
  3. The third option is to make the full payment by the due date mentioned in the credit card statement. 

Now the big question is, what is the importance of making credit card payment on time? The reasons are as follows:

  1. If you choose only to pay the minimum due amount and carry the remaining balance to next month consecutively for even 2-3 months, you might end up collecting a lump sum amount of credit on your head, with a very high-interest rate. 
  2. Another crucial aspect is if you do not make a timely credit card payment, then the bank will levy late fees on you, which will further increase your debt and also affect your credit score adversely. 
  3. Also, by accumulating debt on your credit card, you will keep getting closer to your credit limit. It is the maximum limit which is determined by the bank for you on the issued credit card. The moment you cross the 30% mark of your credit utilization limit, your credit score will start taking the hit.
  4. Not making timely credit card payments also square off any benefit that you received through credit card as you end up paying that much amount or even more by way of interest to the bank.

So, what is the best time to make credit card payments? The answer is, you must aim to make complete payment of your credit card bill by the due date. Also, if right from the start you maintain a habit of making the complete payment each month, then as per the interest-free or grace period of 50 days on each card, no purchase of yours will attract any interest. However, once you cross the grace period with some outstanding amount, then after that every purchase will start attracting interest right from the date of purchase.

In case you make large transactions from your credit card, then make sure not to let the outstanding amount cross 30% of your credit limit. You can even make multiple payments in a month to keep the balance under control.

Few tips for managing your credit card are: 

  1. Choose the card that provides offers for the maximum chunk of transactions you will do from it. 
  2. Make sure you are using the card to buy things that are within your affordability. 
  3. Keep close track of your expenses, outstanding balance, and due date. 
  4. Also, make sure that the credit card payment is made before or by the due date and never after. 

Importance of making credit card payment on time

A credit card is a handy instrument in times when you are facing a cash crunch or even save on your regular expenses. It provides the facility of availing instant credit on your purchases which are to be paid at the time of monthly billing. The credit card payment can be made in three ways: 

  • You can choose to make the complete payment of the outstanding amount on the due date. 
  • Another option is that you pay only the minimum due amount.
  • Or, you can even choose to make the complete payment well before the due date. 

The timely payment of a credit card is extremely important because: 

  1. Non-timely payment of credit card bills attracts late fees which is substantial. 
  2. Missing credit card payment due date also affects your credit score adversely. 
  3. By not making the complete payment you start accumulating outstanding balance on your card which will negatively impact your credit score if it reaches anywhere close to 30% of the credit utilization limit. 
  4. Also, you lose on the benefits you availed through credit card as you accumulate more and more interest on your purchases.

The best way to make credit card payments is to never carry the outstanding balance to next month. If you follow this practice right from the start, then you will always be within the grace period, and none of your purchases will attract interest.

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