Surveys have suggested that the use of credit cards in India has shown a trend of 23% yearly growth. This report also mentions July 2019 as the highest point of credit card use with more than 178 million transactions being recorded across India.
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These data clearly suggest increasing use of this financial tool in India, while also suggesting the necessity of users learning best methods of using credit cards.
While there are many aspects to using credit cards wisely to make the best of their benefits, payment of bills stands out as a crucial aspect. This can be attributed to a simple fact that time due payment offers several advantages to its users. Furthermore, users can also avail various credit card payment offers, making this whole transaction even more financially lucrative.
Some advantages of duly credit card bill payment are as follows –
1. Increase CIBIL score:
The primary long-term advantage of paying credit card bills on time is that of an increase in credit score. Any user who regularly pays his/her bill before its due date has a high CIBIL score since they have good repayment habits and therefore carry lower credit risk.
2. No additional charges:
Late payment of credit card bills leads to additional charges which can be flat fees or interest-based, depending on the bill. Users of these lines of credit should note their due dates. They can avail credit card payment offers not just to clear their regular bill but also cash withdrawals and personal loans. Typically, cash withdrawals must be cleared within 50 days, while loans offer a tenor of 90 days.
3. Extension of credit limit:
An elementary method of using a credit card wisely is by paying the bills on time, which extends the available credit limit since its outstanding amount is zero. This allows a user to make more purchases with his/her card.
4. Offers of upgrade:
Financial institutions usually offer upgrades to those who have maintained an exceptional track record of paying their bills on time. These offers include increased credit limit and better credit card reward points to individuals who are diligent. Sometimes, they also offer reduced annual charges on these upgrades.
While avoiding additional charges directly reflects on a user’s financial burden, there are a few other disadvantages to late payment too. These must be avoided to make the most out of a credit card.
Most major issues of late payment are listed below –
- Discontinuation of account: Any individual regularly missing out on bill payments can have his/her card discontinued by a financial institution.
- Deduction from fixed deposits: Any individual who has a line of credit issued against his/her fixed deposit account will have their billing amounts deducted. This can turn out to be detrimental to an individual’s long-term financial planning.
- Depreciation of CIBIL score: A vital issue coming up with delay in payment, this has already been discussed above. Noteworthy, regular delay despite the numerous credit card payment offers can depreciate an individual’s credit score to an extent when he/she cannot avail any line of credit.
Hence, paying credit card bills is crucial, especially to address emergencies. In such situations, cardholders can avail a loan against their available credit card limit. This feature is available with credit cards like the Bajaj Finserv RBL Bank SuperCard. The available loan is also interest-free for up to 90 days.
Along with numerous credit card payment offers, this NBFC also provides pre-approved offers, which hastens the application procedure while making it quite easy for potential users. Such pre-approved offers are provided on several financial products, including personal loans, business loans, etc. You can easily check your pre-approved offer by providing your name and phone number.
Cardholders should refer to their monthly statement thoroughly to take note of the due date. They must also make sure to always pay the total amount due on their credit card to improve their credit score and avoid piling of debt.