A credit card is a crucial financial instrument that enables individuals to manage their finances with convenience and flexibility. The enticement towards credit cards stems not only from their potential to ease daily transactions but even from their ability to improve your credibility if used responsibly. Being aware of credit card eligibility and making timely repayments are essential for realising the complete potential of this financial product.
When it comes to how much you must repay on your credit card, the answer is pretty clear – the full amount by the due date. This approach is vital for distinct reasons. Firstly, repaying the whole outstanding due by the due date exempts you from finance charges, which might rise to a startling 43.20 per cent per annum. Moreover, prompt repayments help avoid the implementation of late payment penalties, ensuring your credit score stays intact. While repaying the minimum amount due or MAD saves you from late payment charges and a negative impact on your credit score, it does not safeguard you from hefty finance charges on the outstanding due.
Making sure that credit card repayments are performed on time requires a disciplined and proactive approach. Here are some tips to assist you smartly manage your credit card repayments –
Ø Plan your budget properly
Budgeting is the key step towards pragmatic financial management. By adding credit card repayments to your monthly budget, you tend to create a roadmap for your expenditures, which includes the allocation of funds for your credit card dues well in advance of the due date. This strategy not only helps keep track of funds required for repayment but also fosters financial discipline, which prevents you from being caught off guard when the credit card bill arrives. To start, evaluate your month-on-month income and spending pattern to understand how much you can realistically keep aside for credit card payments without hampering your savings objectives and basic requirements.
Ø Examine your credit card activities
Keeping a close watch on your credit card spending to avoid budget overruns is imperative. Assessing periodically your transactions helps you keep track of your expenses and alter spending habits as required. There are many financial institutions today that allow you to track real-time credit card transactions using their mobile banking apps, which makes it easier to stick to your budget. Knowing your spending patterns and making smart transaction decisions can assist you have a moderate and repayable credit card bill.
Ø Set reminders
It is easy to lose track of due dates. Using technology to keep these dates on your watch list can dramatically lessen the risk of late payments. Use your smartphone’s calendar applications or set up notifications in your banking app to keep track of future repayment deadlines. These reminders act as timely cues, ensuring that you have enough time to plan for the payment and avoid costly late payment fees and interest penalties. Additionally, consider utilizing a CC EMI calculator to effectively manage your credit card repayments.
Ø Set standing instructions
Automating credit card repayments is an excellent way to ensure prompt payback. Setting standing instructions with your financial institution permits them to deduct automatically the repayment amount from your savings bank account on a particular date every month. This payment method is useful as it removes the possibility of human error or forgetfulness, assuring your repayments are received on time. Automatic payments can also be set for the minimum due amount, allowing you to retain your credit score while avoiding late payment penalties.
Final thought
Most financial institutions emphasise the importance of healthy financial habits as this is one of the credit card eligibility parameters for securing a card. Once you start using the credit card, they urge you to promptly repay the dues on time so that your credit score is not negatively impacted, which allows you to boost your chances of securing more credit in the future. You can ensure full repayment of the outstanding credit card dues by following the above-mentioned financial habits. Doing so not only safeguards your financial health but even strengthens your relationship with credit, setting the path for a more profitable and secure financial future.
