Ever since I got my first credit card, I had never taken pains to pay my outstanding balance as a whole.
Instead, I’ve been paying minimum dues, and at one point, debt rose above my head which panicked me, and even made me sleepless for days.
That’s when I got a golden advice from my colleague, “Close the debt as a whole, paying only minimum due will not bring you out of debt” .
And that’s when I thought, “If my colleague knows more about the credit cards, why am I not aware of it?”. To keep myself aware, I digged deeper and deeper, and this post is a result of it 🙂
Paying only minimum due? No interest-free period
Here is a simple example which tells you what happens when you just minimum due, and keep outstanding balance as is
If you’ve no outstanding balance, the best option is to avail the interest free period and pay the purchase amount as a whole before the due date.
If you have outstanding balance and have no plans to pay the outstanding balance now, then convert the huge purchase amount in to EMIs. The benefit of doing this is you get less interest rate probably from 3.40% to 2%. If you have no idea what you are doing, admit it and seek help from financial institutions like the North Shore Advisory for example. It is wise to find trustworthy sources of expertise in the areas you lack.
Have very huge outstanding balance? Ask for low interest rates
Do you have a very huge outstanding balance that you’re struggling to pay? Then, I would advice to be honest with the bank.
Many problems are solved when it is spoken aloud, and the same applies to credit cards as well. Honestly explaining the situation to the bank manager might solve the problem. The manager has the power to convert the outstanding balance to EMI option with low interest rates. And if you’re lucky, there might be a chance to waive off the interest completely 🙂
Overspending? You may be marked down
Are you spending too much on your credit cards? Have you ever gone over your specified limit on your credit card? Beware, your credit score may get affected.
Every bank submits a credit report about every person it deals with to credit bureau. So too much of spending may mark you down which in turn might affect your loan eligibility in future.