Do you find swiping easier than making your credit card payment on time? Don’t worry, as you are not alone. While cardholders created a new record by spending nearly ₹1.8 Trillion in a month last year, managing your bills is crucial for a good experience.
From setting a budget to knowing billing cycles, there are some factors that can help you do just that.
Guide to Credit Card Payment Cycle
While you can make effortless payments throughout the month with your card, remember one crucial detail: if you don’t clear your bills on time, you pay interest on what’s due. The payment cycle works like this:
- At the end of the billing cycle, the issuer will send you a credit card statement.
- This statement will specify the total amount you owe, the minimum due amount, and the due date.
- Making the full payment on or before the due date will attract 0 interest charges and keep your credit score high.
- Paying only the minimum amount due will keep your card active, but the remaining balance will accrue interest.
Why To Pay On Time?
Sticking to deadlines when it comes to your credit card bills is always a good idea and here’s why:
Evade Late Charges
- If you delay payment, your next bill will include late payment fees along with interest.
- Making timely payments can help you dodge these additional costs.
Build Your Creditworthiness
- Timely repayment of credit has a weightage of around 35% in determining your credit score.
- Making these payments on or before the due date will prevent a drop in your credit score.
Keep Your Accounts Out of Collections
- When you don’t pay your credit bills for a long time, credit card companies turn to debt recovery agencies for the unpaid balance.
- Once an account goes to collections, you’ll no longer get the opportunity to clear your minimum balance.
- Instead, the debt recovery agency will demand repayment of the entire balance as well as the additional fee.
Get Affordable Interest Rates In The Future
- If you are known to delay payments of your credit card bills, this will become a part of your credit report. This has a negative effect on your score and come in the way of easy and affordable access to credit tomorrow.
- Conversely, regular and timely payment will boost your credit score, allowing you to get credit at lower rates in the future.
Best Payment Strategies to Adopt
It is not difficult to streamline credit card payments when you follow easy tips like these:
Keep a Tab on the Billing Cycle
- Generally, banks provide a 45-day interest-free period that includes the statement cycle and the grace timeframe. This is your billing cycle, and understanding it is key.
- Time your purchases in such a way that you can enjoy the maximum credit-free period and repay on time.
Pay More than Minimum Due Amount
- If you can afford it and plan for it, always try to pay the entire bill amount and not just the minimum due amount.
- This way, you can avoid interest accumulating on your unpaid balance.
Set up Auto-Payments
- The easiest way to avoid missing credit card payments is to opt for automation.
- This facility allows you to set up a recurring payment from your bank account.
- It also allows you to opt for paying the minimum amount due, but it is always better to opt for the entire balance.
- Maintain a sufficient balance in your bank account to avoid additional bounce charges.
Leverage Mobile Apps
- When it comes to timely bill payments, mobile banking or credit card applications are a saviour.
- These apps allow you to pay your credit card bills directly with a single tap.
- You can also get your card statement on the device.
- Moreover, you can set up reminders to never miss a due date.
Track Your Credit Card Statement
- By checking your statement every month, you can track your expenses and plan for the future.
- These reviews ensure that you maintain healthy finances and avoid discrepancies.
- What’s more, they help you keep your credit utilisation low, which is useful for boosting your creditworthiness.
When you get a credit card, do not overextend yourself and avoid getting into the deep end of the debt. Want to track expenses and manage your spending wisely? Get the One Credit Card.
Using the powerful One Credit Card mobile app, you can set budgets for different spending categories, get alerts and analyse your transactions smartly. You can also enjoy 5X rewards and attractive offers on shopping and travel with this premium metal card. Apply now to enjoy these benefits without paying any annual and joining fees!