Finding it difficult to pay off your credit card bills on time? Or do you simply pay the minimum amount just to ensure that you aren’t viewed as a defaulter? Some working capital management and learning how to pay credit card bills effortlessly can help you not just keep your credit card limit up and repayment amount down, it can improve your credit score.
So, take a look at these five useful tips to pay off your card bills faster.
- Maximise Your Minimum Payment Amount
The practice of paying just the minimum amount is that the credit card interest rates are still applied on the remaining amount. While paying the minimum amount might seem like a sort of respite, it comes at a cost. The amount you need to repay continues to rise over time. Also, as mentioned earlier, it will impact your credit score. This in turn could impact future loan approvals and access to various banking services. A quick online CIBIL check can help you check on your score. If it is declining, consider paying more than the minimum amount each month.
- Set up Automatic Payments for Your Credit Cards
In order to avoid unintentional delays in bill payment, you can opt for automatic payment on your credit card bills. You can easily activate the auto-debit facility on your bank account and avoid any late payment fine. All you then need to do is ensure that your account has the requisite amount for the payment to be forwarded to your card issuer.
- Know Your Billing Cycle
It always pays to know everything about your card, including its billing cycle. This will give you enough time to ensure effective working capital management so that you can make the most of the interest-free credit window. It is also advisable to your purchases according to your billing cycle, to get the most benefit out of your card’s holiday period.
- Pay Off Cards with Higher Interest Rates First
In case you have multiple cards, things could get confusing at times. Things as small as the order in which you pay off your card bills can prove crucial. It is recommended to pay off cards with higher interest rates first to get the most benefit. A good way to prioritise card payments is by setting up the auto-debit facility or a calendar reminder in the order you wish to pay off your credit card bills.
- Convert Payments to EMIs
Another way to make the payments more affordable is to request your card issuer to convert your bill payments into EMI format, rather than lump-sum payments. However, check how much the bank charges for this facility. It could mean a monthly interest rate of 2%-3% and a processing fee of around 1%-2%. But the convenience might make EMIs worth it.
So, don’t take on stress or put your credit score at risk. Learn how to how to pay your credit card bills as quickly as possible. You could even consider setting up a monthly budget and sticking to it to ensure greater savings that can go towards bill payments.