Credit cards could be of enable for immediate revenue, particularly in the course of emergencies, but if not applied cautiously, they could simply develop into a curse in disguise.
To get started with, there could be various motives you would want to close or cancel a credit card. For instance, you could be either spending unnecessarily and heading towards a debt trap or not making use of some of your credit cards at all.
Hence, whilst making use of credit cards, you must prevent some popular blunders which could turn out to be pricey and can even finish up generating you fall into a debt trap. A debt trap can be financially damaging, and you could be piling up on interest unless the outstanding dues are paid back in complete.
Here are some vital items to retain in thoughts whilst making use of your credit cards:
1. No interest-free of charge period on money withdrawals
Credit cards normally supply an interest-free of charge period of up to 51 days at the point-of-sale (POS) of merchant establishments or on the internet. However, this facility is not applicable on ATM money withdrawals making use of a credit card. You will be charged interest from the day you make the withdrawal.
2. Rolling more than the credit
Rolling more than the credit signifies, not paying the credit card dues in complete on or by the due date. This incurs higher interest prices or finance charges which hover about 3.5 per cent per month and in between 36 per cent and 45 per cent on an annual basis.
In case of generating partial payment for credit card dues, make sure to spend the rest of the quantity as early as probable without having waiting for the next due date, to retain your interest charges decrease.
3. Credit card due date
Credit card penalty gets levied which could be as higher as Rs 750 to Rs 1,000, based on the quantity if the last date to spend gets missed. The penalty varies as per the card issuer and the quantity of outstanding, which is normally at least 5 per cent of the bill quantity. Hence, professionals say an auto-debit mandate with one’s bank – which guarantees credit card payments are made properly in time — is an excellent selection.
4. No interest-free of charge period limitations
All credit cards normally give 45-51 days’ free of charge credit period prior to the due date arrives. Having mentioned so, if the complete bill quantity of the preceding cycle has not been paid, there is no interest-free of charge period. Hence, you will not get any interest-free of charge days on any new purchases, if you do not spend the complete bill quantity on time and will also finish up with higher interest expense.