After Diwali Shopping, 6 Smart Ways To Pay Off Your Credit Card Bill
We celebrated Diwali which is a good time for big purchases such as gadgets, appliances and cars. In addition, attractive offers complemented by discounts on credit cards during the holiday season stimulate the desire to spend. This can lead to increased use of the card. Stretching your card’s spending limit can add costly and difficult to repay debt. So, it’s important that after the holiday season you are aware of your credit card dues and don’t let them snowball into big debt. Here are some smart ways to pay off your credit card bill after the holiday season.
Pay according to your billing cycle
If you have contributions on more than one credit card, prioritize paying the contributions with the closest due dates. For example, your credit cards have statement dates of the 8th, 18th, and 28th of each month. If you spent money in the first week of the month, you should prioritize paying the card bills in the order of their statement dates i.e. 8th, 18th and 28. However, if you used the cards on the 20th of the month, you must prioritize the payment with the statement date falling first, ie the 28th of the current month and the 8th and 18th of the following month. . Knowing the billing cycle will allow you to benefit from a maximum interest-free credit period and a maximum period to reimburse your membership fee.
Pay the lowest bill first
Here’s another way to prioritize your contributions. If you have multiple overdue credit card bills, you can start by paying the lowest bill first, then move quickly to paying the others. Paying the lowest credit card bill will slightly improve your credit score and your credit utilization rate. You have little time to waste if you want to avoid high interest charges on your contributions.
Convert large invoices to EMI
You can ask your credit card company to convert your contributions to EMI. Most credit card companies allow you to do this. This helps reduce the risk of late payments and the associated penalties, and protect your credit score. Before EMI conversion, find out about the interest rate charged and compare it with your other cards.
Think about balance transfer
You can consider consolidating all of your debts into one through the balance transfer process, which allows you to transfer your contributions from one or more cards to a single card. If you go for this, you will get a little break from your debt stress as you will get up to 90 days without credit from the new card issuer. In this way, you will save time with the issuer to organize refunds. Keep in mind that once the credit period is over, your issuer will charge regular interest.
Avoid using the card until you have paid your contributions
When you’ve already spent more than your budget, adjusting new spending becomes essential to deal with your cash flow shortage. You should avoid spending with your credit cards until you have paid your dues. It will also help you stick to your regular essential expenses and avoid unnecessary expenses.
You have to pay MAD
If you are unable to pay your contributions by the due date, the minimum you must pay is the minimum amount owed. This is usually 5% of your contribution for that month, subject to a lower limit. Without MAD, you will be penalized for late payment. Missed payments hurt your creditworthiness and your credit score. Note that the MAD only saves you the penalty and not the interest accrued on your contribution.
There are several pitfalls of not paying credit card bills on time. During the holiday season, if you’ve spent more than you planned, you should immediately set up a plan of action to pay off your bills on time so you can be debt free without straining your finances.
Adhil Shetty is a guest contributor. The opinions expressed are personal.