In modern day life credit card became a bye word for convenience in buying goods and services, though you have no ready cash to pay for them. Be it buying your air line tickets or shopping, credit cards come handy. But let us be aware, what happens if we don’t pay the entire monthly outstanding within the due date.
If you are aware that you will be charged at 3% to 3.5% interest or finance charges per month, yes you are right, it is per month of the unpaid credit card outstanding carried forward or 38% average interest per year on the outstanding unpaid balances of your credit card, you will think twice before making purchases that are not needed by you. For the credit card facility you are charged an annual fee ranging from free to Rs 2000 by various card issuers.
Apart from this you must manage your credit card in such a way that you buy goods and services for which you can surely pay for when due, without ever thinking of minimum balance payable. The moment you chose the minimum balance payable clause, you start paying at 3 to 3.5% every month on the outstanding balance. If you buy goods worth say Rs11000 during a month and chose to pay onlyRs1000/- and allow the balance in easy installments, you start losing more than a thousand rupees per month as interest. If you continue to pay 1000 rupees per month, your balance will never come down even after you pay that amount for years.
Suppose you pay at the rate of Rs1000 per month on the outstanding original Rs10000 for 5 years. In this process you might have paid 60000 rupees but your outstanding will continue to be more than Rs10000/- So don’t fall into the trap of minimum balance payable clause on the credit card. Never buy goods or services which you cannot pay for when your bill is due.
You can have last laugh, if you carefully keep in mind the billing cycle of your credit card and buy goods or services during the period that allows you anything between 30 days and above for paying the dues.
But once billed be prepared to shell down the entire outstanding at one stroke. Save your self from the agony of debt trap by ignoring the minimum amount payable clause. Chose between enjoying free credit and credit at the rate of 38% pa. Never buy items that are not really needed by you.
Never buy if you feel it will be a burden to clear the dues in a single stroke. Never fall a victim to ‘minimum payable’ clause. Save your self and enjoy the credit card facility without losing your shirt.