While news on the sky high EMIs applicable on house loans may have you worried, not clearing your credit card dues on time can be an even more costly affair. Often people tend to see the obvious by fretting over spiraling EMI rates and so on, but make careless and ignorant mistakes when it comes to paying your credit card bills at time. This leads to incessant fines, penalties and turmoil for a credit card user, a costlier future that is not quite visible in its earlier stages. Many credit card companies have hiked their interest rates without prior information to their customers, causing alarm and furor in the industry. The credit card industry has attributed this rise to the overall rise in interest rates, due to which it had no alternative but to follow suit. This interest rate is levied when customers fails to clear their payment on time, forwarding it to the next payment cycle.
Banks claim that this rise is the direct consequence of the global tightening of interest rates, which has impacted their performance in the market. Although the interest rates have been hiked, credit card users will begin to see their pockets hit only from the third consecutive month. Also, since many top players have already adopted this move, other banks followed suit by hiking their interest rates. Many organizations raise their interest rates on a differential policy, by increasing their interest rates on various parameters like their spending and payment behavior, coupled with their overall financial policy.
While many credit card organizations have already hiked their interest rate by almost 3% per month, some organizations have not even informed their customers of such a spurt in interest rates. This is highly unethical as customers have found out about such a hike only in their monthly statement. Many customers may have not even noticed such a rise, paying their dues in an ignorant fashion. Banks have clarified their stance by claiming that all their applicants are provided relevant information on the highest interest rate that can be chargeable at the time of accepting their application. This information has also been furnished at the time when the card is issued to the customer and in all their monthly card statements. Customers can also go through the terms and conditions at the time of issuance of card, to learn about the company’s provisions on change in interest rates. Thus, since the behavior of the market cannot be tapped due to its unpredictability and volatility, customers need to watch out for any changes in amounts in their monthly statements. Also, clarify all dues prior to entering into an agreement on a credit card with a bank to avoid any issues on a later date.
Remember, the interest on credit cards are one of the highest interest rates that any banking or non banking financial institutions can actually levy. Also, there are no tax benefits that you can actually receive on accumulating such debts. Therefore do not mount the debt that is bound to collect on the credit card. Try to repay your dues on time. A rolling credit concept is mostly misunderstood by people who eventually land up into more debts because they need to opt for further debts like personal loans or any other type of loans to repay the debt on their credit cards, thereby, creating huge dents on your financial future. In order to avert yourself form such unlikeable situations, it is better you understand the repayment policy of your credit card and stick to the monthly repayment plans so that in the eventuality of opting for debt in future your Credit Information Report (CIR) will be strong to get you loan application be accepted in the fast track lane.