A credit card boosts your purchasing power, offers emergency finance, and also adds more flexibility to your life. However, relying too heavily on a credit card has its own downsides, the biggest one being spiralling towards a debt trap if you’re not careful.
However, to ensure that you get only the benefits and none of the pitfalls, making your credit card payment in full before the due date is a good financial habit. It can help you avoid this outcome, while also becoming financially disciplined.
Read on to know more about the benefits of paying your credit card bills on time.
It eliminates interest payments
While paying the minimum amount due is an option, note that the issuer charges interest on the balance. So, it’s best to make your credit card payment in full, before the due date. This is because once you default it is possible that you’ll fall prey to a pattern that can eventually land you in a debt trap.
It improves your credit score
Making timely credit card payments will build your credit score too. Also, paying your credit card bills before their due date results in lower credit utilisation. This is because credit card issuers report your balance to the credit bureau sometime around your due date. If you have maintained a low credit utilisation ratio, the issuer will report the same and ultimately it will help your credit score. This outcome shows that you are not credit hungry, but responsible and can use credit smartly, while living within your means. On the other hand, a high credit utilisation ratio sends a negative message and hence your credit score may fall.
It frees up the credit limit available
Finally, making credit card payments on time also frees up your credit availability. On making the credit card payment in full, the said amount is added back to your credit limit. Then, you can use this credit line to make purchases to your heart’s content or simply maintain it as a back-up. However, it’s still important to stay well within the credit limit. This will help you avoid penalties and shield your credit score from negative impact on
So, make sure to pay your bills in full and on time to reap these benefits. If you don’t have a card and wish to apply online for a credit card, consider the power-packed Bajaj Finserv RBL Bank SuperCard. An all-purpose card, this one serves as a loan card, EMI card, and an ATM card. It only has minimal charges and offers perks such as no-interest cash withdrawal for up to 50 days, conversion of purchases into easy EMIs, and no-interest personal loan for up to 90 days, once every year. To grab this card, simply check your pre-approved offer from Bajaj Finserv.
While Bajaj Finserv offers instant approval on its credit cards, using the pre-approved offer is a quick hack to hasten the process even further!