All credit card users must follow one golden rule when it comes to having a successful credit card run: thoroughly inspect and analyze the terms and conditions before signing up for any credit card. Else, you may find yourself in a whole new world of debt and financial turmoil. In case you skip your monthly payment or hold any outstanding dues or fines on your cards, then you will be susceptible to high rates of interest by the bank, Moreover, these rates of interest are not just applicable on the amount due. Even if you clear a large percentage of money from your pending bill money, these high interest rates will still be levied on not just the pending amount, but also on all your future transactions till the amount has been cleared. While many of us are aware of this common practice, some of us are still ignorant on the way this system functions.
Having outstanding dues not just hampers your financial goals, but can also make you lose out on your interest-free credit period. As a part of certain offers or schemes, you may enjoy an interest –free period for almost a month. However, with the inception of any outstanding or pending dues, you lose out on any such additional benefits, adding to your burden and debt woes. When credit card users find themselves in such a situation, they volunteer to clear half the dues immediately. In such a scenario, you will then have to pay interest rates not just for the outstanding amount, but also on all further credit transactions that come under your interest free facility for credit. Your interest scorecard begins to function soon after, adding to the financial burden on your shoulders. In order to safeguard yourself from such pricey anomalies, it is best to go through the terms and conditions booklet, which specifies all this and much more about your credit card. But very few bother to go through these details. Card holders are also required to quote their APR or Annualised Percentage Rates along with the manner in which the outstanding amount will be calculated on a monthly basis.
The Indian Bank’s Association also ensures that all credit card users receive a booklet with their first credit card, providing all details on the terms and conditions for processing, the manner in which interest and other charges will be levied, followed by other relevant information on the same. This information can also be accessed in the bank’s website. This practice ensures that credit card users are given information on a prior basis about the manner in which the amount will be charged to their account. Since credit cards offer such a high rate of interest against transactions, it is best to opt for the Equated Monthly Installment or EMI system. When you are under the repayment crunch, by choosing the EMI scheme, you will face a lesser rate of interest as compared to that offered by credit cards. This will help you in settling your credit card’s outstanding monthly balance. However, you must also remember that the EMI scheme may not be applicable for all transactions, and often, not for an outstanding credit card balance. In such a scenario, it is best to opt for a personal loan. Personal loans can be a little time consuming as they take approximately 7-10 days to process. But the wait is definitely worth it as you can pay back your outstanding dues with this amount, that too at lesser rates of interest as compared to other options and is comparatively a much cheaper option than compared to credit cards due to their interest component.