Credit Card: During festivals, we often end up spending more than necessary. During this time, many types of discounts and offers are running on favorite brands. There is no harm in using a credit card to buy things of your choice while taking advantage of these offers. However, during this period, if you use the card a lot or do not manage the credit card expenses properly, then you may have to bear the brunt of this negligence. Excessive use of credit cards can cause financial trouble for you. While using a credit card, it is very important to keep some things in mind to avoid any kind of interest charges or late fees, which we have mentioned here.
Avoid rollover of credit card balance
If you do not have money to pay the entire bill, then you can pay at least 5 percent of the bill amount. In this case, your outstanding bill becomes due for the next month. However, experts say that credit card holders should avoid doing this and try to make full payment. The entire outstanding amount should be paid before the last date of bill payment.
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Avoid new purchases after rollover
If you have chosen to roll over some of the amount in the next billing cycle, it is best not to make any new purchases until you have paid all past dues. If there is an outstanding balance on the card, then the benefit of interest free credit is not available on any new expenditure.
Interest will have to be paid on withdrawing cash from ATM
With credit card purchases, you get the benefit of interest free credit for a tenure of about 45 days or more. This means you can spend today and pay later within 45-51 days without any interest. However, if you withdraw cash (up to the cash limit) from an ATM, you will have to pay interest from day one. Apart from this, there may also be a transaction fee involved. Therefore, unless it is very important, one should avoid withdrawing cash from ATMs.
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Make the payment before the last date
The credit card bill should be paid within the last date. If you don’t do this then it could cost you dearly. The late fee can be up to Rs 1000 depending on the credit card balance. For example, non-payment of an amount of Rs 10,000 may attract a late fee of Rs 750, which is 7.5 per cent if not paid on time! If you do not make the payment by the last date, you may face two types of charges. For this, you will have to pay interest on the outstanding amount along with late fee.
It is important to manage a credit card properly, as your credit profile depends on it. With the help of a good credit profile, you can also get loans from banks.
(Article: Sunil Dhawan)
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