Credit Card is a small plastic card issued by a financial institution. Credit Card allows you to purchase goods or services on credit, usually at point of sales. However, it can be used for online shopping and bill payment as well. Also, you can withdraw money from ATMs using your credit card. Though, there is a withdrawal limit on every credit card. You get a pre-set borrowing limit according to the your credit rating. Cash withdrawal limit is pre-defined and is included in the total limit of the card. Credit cards are primarily used for short-term financing.
How, interest is being charged on your credit card?
Credit cards charge interest. For instance, let’s say you credit card’s billing date is 15th of every month and payment due date is 5th of the consecutive month of bill date month. You used your credit card for amount Rs.20,000.00 for shopping on 16th December. Now, bill for your this shopping will be generated on 15th January. And, you will be paying this amount back to the card on 5th February. In this way you get a grace period of 50 days for making payment to your credit card dues. However, if you fail to pay your credit card’s bill on 5th February, in that case, you will charged interest on your outstanding amount i.e. Rs.20,000.00 @ of 3.50% per month. This rate of interest may slightly vary from one credit card to another.
Charges to be paid on a credit card:
Especially Relevant, if you do not pay any amount on your payment due date, then, you will have to pay late payment fee plus service tax. Late payment amount is around Rs. 700.00 to Rs.750.00 plus service tax. However, if you pay the minimum due amount, in that case, you save your late payment charges. And, then you can pay your remaining bill as soon as possible; because until you make complete payment of your credit card bill, you will keep paying interest @3.50% per month on your total bill amount from the very next day of your payment due date.
Also, not only these credit card companies charge late payment fee, but they charge finance fee and over the limit fee as well. And, believe me, these credit cards have various charges, fees associated with them and if not used judiciously can lead you to debt trap. So, before you start using your Credit card, make sure you are “Credit Wise”.
Recommended Read : Top 10 Credit Cards in India
How to be Credit Wise while using a Credit Card?
There is a very intelligent quote “Some debts are fun when you are acquiring them; but, none are fun when you set about retiring them“. Therefore, before you start using your credit card, make sure you understood all the details about it. Also, make sure you use it as per the dates. In short, be Credit Wise while using your credit card!!! There are some tips which surely will be beneficial for you while using your credit card:
- Mug up the dates, if possible, more than your anniversary dates; or at least equivalent to those dates.
- Try and use your credit card after your billing date. Because, this gives your 50 days grace period for paying off your credit card dues. For example, if your card’s billing date is 15th of every month, then, avoid using card after 1st of the consecutive month of the billing date.
- However, if you have used your card after 1st of the consecutive month of the billing date, and you don’t get 50 days grace period for making payment of your credit card’s due; then make sure, you pay off your credit card’s bill on the due date that would be 5th of the consecutive month of the billing date.
- And, if you don’t have sufficient amount to pay off your credit card dues, then, make sure that you pay at least the minimum due amount. So, you don’t have to pay late payment fee, finance fee and service tax on these charges.
- Also, avoid cash withdrawal using credit card. It attracts interest @ 3.50% per month from the day 1 of your cash withdrawal. Hence, you get no grace period for paying off the card dues.
By following the above tips, you would be able to save your late payment charges, huge amount of interest on your card’s due amount; and most importantly, your credit report.
How to make payment of Bank A’s Credit Card using Bank B’s Account?
This is quite easy.Let’s say you have a credit card of HDFC Bank. And, you want to make payment of your HDFC Credit Card dues using your SBI bank account. Type HDFC bill desk on Google, and you will get many links. Choose one of them, you will see a screen similar to the below one:
Here, fill in your HDFC credit card number, email address and amount you want to pay to your credit card. Then, select your desire bank from the drop down, in this case, its SBI. Click on pay and proceed. Using bill desks, you can make payment from any bank account to your credit card of another bank.