Paying your credit card bills on time is important to maintain a strong repayment history which helps you maintain a good credit score. However, here are some more key things to know to manage your credit cards better:
- Pay the total amount, not just the minimum due
Paying only the minimum amount due keeps your account active and your credit score safe, but the remaining balance starts attracting interest. Since credit card interest rates are high (20-49% p.a. or even higher), over time, even a small unpaid balance can turn into a costly debt. Paying the total amount due ensures you stay interest-free and financially stress-free.
- Set auto-debit or reminders to avoid delays
When you fail to pay even the minimum amount due by the due date, it shows up under the DPD (Days Past Due) section of your credit report and can lead to a drop in your credit score. Setting up auto-debit or payment reminders (via bank apps, calendar alerts, or Paisabazaar) helps ensure you never miss a payment.
- Avoid cash withdrawals from your credit card
Credit cards come with cash advance facility allowing you to withdraw cash from an ATM using your credit card. While this seems to be an easy way to get instant access to cash, it can quickly lead to debt. This is because credit card cash withdrawals do not qualify for the interest-free period, plus new transactions become ineligible for the interest-free period.
