Credit cards came into existence way back in the 1950s started by the Diner’s Club and have been used by American’s ever since 1959 when introduced by American Express. In today’s age credit cards are being widely used as one of the most popular methods of payment. There are various reasons why credit cards are chosen as popular modes of payment, convenience and security being some of them. It’s hassle free to carry a credit card than loads of hard cash.
Online transactions are one of the main reasons for its gaining popularity.
What Exactly Does A Credit Card do?
In terms of functionality, it’s simple you use the credit card to buy something and later on pay the bank. In terms of the physical aspect, it’s a thin rectangular piece made of either plastic or metal that is provided by the bank where you’re an account holder. It’s a means to let you borrow money for the goods and services in hand and pay the bank later on.
It seems simple enough but there’s a catch, you are required to pay the financial institution plus an interest rate which is agreed upon during the time of receiving a credit card and the payment has to be fulfilled within a certain period of time. Aside from the standard payment line, the bank providing the credit card may also grant you a cash LOC(Line of Credit) if you’re a credit card holder, this will allow you to acquire hard cash via ATM, bank tellers or through credit card convenience checks.
These kinds of advances have different rules with higher interest rates and no grace periods.
The banks usually have pre-conditions regarding the limit on the amount that can be obtained by the credit card holder.
Generally, financial institutions charge a higher APR (annual percentage rate) in contrast to other variants of consumer loans. The interest rates on unpaid balances are imposed after a month of the purchase done. In case you previous balances that are taken forward, you will not be allotted any grace period for the fresh ones. Hence, it’s advised to pay your balances before the fixed date. In addition, this also improves your credit scores. When you delay your payments and go past the date of payment, the interest also starts accumulating.
But remember that different banks have different terms of payment, like the ICICI credit card payment terms are different from the payment terms of the other banks.
Paying Your Credit Card Bills
It is extremely important to keep in mind certain points while making payments for credit card bills. So here are some relevant tips while paying your credit bills.
Make A Budget
Prior to paying all your debts and expenses, you must make a budget by making a list of all the money that’s coming in and going out. By creating a budget you will able to cut down on the unnecessary extra expenditure and attempt to save the surplus money to pay your credit bills in a timely manner. Make an effort to keep a check on spending habits then determine accordingly as to how much money is due to be paid up. Keep a track of your financial stability and the make the payments on time. Creating a budget is one of the best ways you can keep track of your expenses and ensure timely payments of credit bills.
Pay The Lowest Bill Balance On Your Credit Card First
At times when you’re going through a financial crisis and you’re due to pay your credit card bills then first things first, try to pay off your lowest bill balances first on the credit card before the due date. Given that you fail to pay the minimum balance before the set date then you may end up with a high rate of interest which can double up per day from the current interest rates that you generally pay. In addition, it is advised to check your credit card bill with a high rate of interest and pay that first. Make calculations regarding bill charges accordingly set a priority checklist. You can Use Cred For Paying Credit Card Bills.
Opt For EMI To Avoid High Rate Of Interest
Taking assistance from EMIs to pay your credit bills can be beneficial and help with debt problems but it must be done in a mathematical way or you may end up paying surplus hidden charges or pre-closure charges. During a financial crisis it’s not feasible to pay the entire lump sum amount at once but by opting for an EMI, you can pay the huge amount in smaller installments each month. Communicate with your bank regarding EMI option if you’re unable to pay the bills on time. Find out your banks pre payment and pre closure charges before opting for an EMI option.
Stay informed about Billing Cycle
In advance of making the credit bill payments, remember to check your credit card statements and the billing cycle on a regular basis. In order to avoid any extra charges, you must keep a check on your outstanding credit card bills on or prior to the due date. Usually, most of the banks have a relaxation period of 28 days provided to the credit card customers so that the bills can be paid up in two transactions as per the convenience of the credit card holder. One must never skip a due date, in case you can’t pay the entire amount, at least pay the minimum bill amount to steer clear of additional charges. One must keep in mind, late payment charges on credit cards can charge you more than a 30 percent rate of interest per day. Be on the lookout for monthly bill cycle dates which can be during the first week of every month. Better to mark it on your calendars and keep reminder notification on your phones.
Go for The Autopay facility
In order to escape late fees or missing fee charges, it’s beneficial to link your bank account to pay credit card payment on time. This autopay facility gives you the benefit of avoiding hassles relating to the manual payment of credit bills, you don’t need the reminders to pay the bills every month. Although it should be noted, this feature works well for those who have a fixed and reliable monthly salary. In situations where your income is fluctuating and not permanent and you don’t have sufficient balance in your account, then this autopay facility is not suggested. Nonetheless, in any case, you should be cautious about your bill payments and keep a regular tab on it in order to avoid falling into debt traps with the banks.
Mobile App Payments
Most banks and credit card organizations have introduced their own mobile app platforms that will allow you to pay off bills conveniently. All you need are your credit card details registering your mobile number with your account so that the bank can send you OTPs and transaction details without falling into cases of fraud. So make sure you use this facility to pay you monthly credit card bills using this facility as it makes your work easier for you.