According to the Reserve Bank of India, over 76 million credit cards had outstanding payments as of May 2022. This represents a massive increase of around 23% over that of May 2021.
If individuals fail to make credit card bill payment on time, it can attract heavy penalties, decreased credit scores and even credit card deactivation. However, if used judiciously, credit cards provide an excellent opportunity to access interest free credit.
In this regard, mentioned below are a few tips to effectively manage credit card payments:
1. Opt for a balance transfer facility
If an individual is caught up in a bad debt cycle, opting for the Credit Card balance transfer facility could be an ideal way out. This facility allows one to shift balance from one credit card to another, providing temporary relief from debt. This is mostly because upon choosing this facility, the individual gets a 90-day credit-free period. However, once the credit period ends, regular interests would be levied upon the individual.
Apart from these, credit card balance transfer offers additional benefits. For instance, some cards come with a predetermined 0% interest period. However, note that while carrying out this process, cardholders may have to pay a processing fee. Thus, before carrying out a balance transfer, consider calculating the total savings.
2. Pay debt that features the highest interest first
This is another way to make effective credit card bill payment. Most individuals consider paying off the debt that features the shorter due date. However, this could be the wrong tactic in the long run. One should consider clearing off debt that has the highest interest rate first. This way, cardholders can be ensured of reduced interest outgo in the long run.
3. Opt for auto debit facility
Opting for an auto debit facility with credit cards becomes extremely crucial, considering the late payment fee associated with them. This ensures that individuals do not miss out on the bill payment date.
Under this facility, the required amount gets deducted from the bank account of the cardholder automatically on the due date of payment. Thus, an individual does not need to initiate the payment and worry about missing the payment deadline.
4. Know the billing cycle
For effective credit card bill payment, it is critical to ensure one knows the billing cycle. For instance, if a card offers a 30-day credit-free period, it is essential to note that the timeline does not start from the day of purchase. Instead, it starts from the first day of the monthly billing cycle.
Thus, if the billing period of a card starts on the 15th day of every month, any purchase made on the 14th day will feature a one-day free credit window. Thus, knowing the billing cycle allows cardholders to make conscious buying decisions, thereby helping better management of credit card payments.
5. Limit the number of credit cards
Credit cards are undoubtedly excellent financial accessories. However, it is advisable to avoid obtaining too many cards. This is because having too many cards at the same time increases one’s risk of falling into a debt trap by missing out on payment deadlines.
Additionally, the buy now pay later facility entices individuals, which results in them spending on non-essentials. This also leads to poor financial management and overburdens one with additional debt.
6. Perform periodic bill tracking
When it comes to credit cards, it becomes extremely essential for cardholders to review their statements. This is to ensure there are no miscellaneous charges levied by the lender or there are no erroneous transactions on one’s account. Note that fraudulent transactions may disrupt a card’s due amount. This might be possible in rare situations, which can put an individual in a vicious debt cycle.
7. Convert outstanding bills to EMIs
Individuals struggling with timely credit card bill payment can approach their card providers and request to convert the outstanding amount to EMIs. In this regard, it is crucial to note that financial institutions and card providers might charge a nominal interest rate on this facility in addition to added tenor. Individuals might also have to pay a processing fee.
If managed carefully, a credit card can be one of the most beneficial financial instruments in one’s hands. However, with so many credit card providers available in the market, making a conscious choice regarding credit card purchase might become difficult. In such situations, one can refer to Bajaj MARKETS, a diversified marketplace featuring credit cards from prestigious financial institutions.
A credit card offers convenience to individuals during times of financial crunch. Thus, effective management of credit card bill payment becomes crucial if one wants to keep enjoying such benefits. With judicious usage, credit cards can be a great emergency financial tool.
Reference Links
https://www.hdfcbank.com/personal/resources/learning-centre/pay/tips-on-how-use-credit-card-smartly
Also read: Complete Guide: Credit Card Agreement
