Buy till it drops! Big discounts on your favorite brands and other deals and deals with such high decibels rarely go unnoticed by shopaholics.
Funding for these purchases is fine. However, excessive card use or when credit card spending is improperly managed can lead to a financial crisis. Here are a few things to consider when using a credit card to avoid interest or late fees of any kind.
Credit card balance not transferred All credit card issuers require the credit card holder to pay at least 5 percent of the invoice amount and are allowed to transfer the next invoice balance month.
Pay the entire outstanding amount well in advance of the due date and do not carry over any amount into the next billing cycle. The amount of interest or financing costs on unpaid installments may seem low, but the percentage is around 42 percent yearly.
Even when paying online for credit card bills, some issuers keep the option of paying just 5 percent as the default button. Opt for full payment and save on interest costs to finance your lifestyle expenses within the interest-free period.
Why Avoid New Purchases When Carries over If you have decided to carry over some charges to the next billing cycle, it is best to avoid new purchases until you have paid all previous charges.
The benefit of the no-interest period when there are outstanding payments on the card. Cash at the ATM If you spend with a credit card while shopping online or offline at a retailer, you will receive an interest-free period of approx. 45 days or more.
To withdraw cash (up to the cash limit) from an ATM, you must pay interest from day one. A transaction fee may also apply for cash advances. Just avoid it unless there is a financial emergency that needs to be resolved at all costs.
Do not miss the due date Missing the due date and not paying the mandatory 5 percent of dues within the last date of the credit card bill will get very costly. The late payment charges could be as high as Rs 1000 depending on the credit card outstanding amount.
Illustratively, for not paying an amount of Rs 10000, there may be a late payment charge of Rs 750, which is 7.5 percent for not paying on time! To bring the best out of credit card usage, opt for standing instructions for debiting your bank account with full outstanding dues on the due date.
If there are planned expenses, use the credit card around the billing date to maximize the interest-free period. Use credit cards optimally to build a good credit profile over the years.
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