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- Pay your dues in full, don't withdraw cash from ATMs, discard minimum due to avoid interest on credit cards
It’s all good when credit cards offer rewards, discounts, cashback on spends and entitle you to the privileges of airport lounge access, free movie tickets, etc. However, it can also hit you hard with interest that gets charged at a rate of 2.50%-3.50% per month, accumulating to 30%-45% annually. But that won’t be the case if you pay the entire amount due on or before the due date. To ensure you make the full payment, it’s important to plan your spends better and follow several other manuals described in this article.
Table of Contents
Spend According to Your Needs & Earnings
Credit cards don’t attract any interest if the dues are paid in full by the due date as stated earlier. The full payment can be ensured by spending according to your needs and not get influenced by impulsive buying. Check your income and see the amount that you can pay in full. This would also require you to glance at the cash spends that you make.Adhering to these points would ensure the shopping needs are fulfilled while keeping the dues affordable to pay in full.
Credit card companies do throw the teaser of minimum due, which accounts for nearly 5% of the total outstanding balance in a billing cycle, to make the most of one’s ignorance. The minimum due, expectedly, comes very low and tempts one to pay the same, particularly those having a tall outstanding balance on their credit card. So, if you pay the minimum due or even more than that but below the total outstanding, the interest will be levied to the unpaid balance.
Say No to Cash Withdrawal from ATMs
Cash withdrawal from ATMs works differently in a debit card to a credit card. Cash withdrawn from debit cards won’t attract interest but it’s not the case with credit cards on which the interest starts accruing from the moment you withdraw cash. This is quite unlike the retail purchase wherein a cardholder enjoys an interest-free credit period of 20-50 days. The interest is charged at 2.50%-3.50% per month, plus a fee amounting to 2.50%-3.50% of the cash amount withdrawn.
Pay Online Instead of Relying on Conventional Methods
You can choose from any of the online methods to pay the card dues. These methods can be any of the following –
- Net Banking
- Money transfer via the National Electronic Funds Transfer (NEFT) or Immediate Payment Service (IMPS)
- Debit cards on payment gateway websites
You can even get the Auto Pay activated to your credit card account so as not to miss the payment. Get it activated through net banking or at the nearest branch. This will ensure timely payment, and if made in full, would eliminate the scope for any interest.
So, if you follow the above points carefully, you can not only avoid interest but also taxes that are charged on the former at the applicable rate.