December 16, 2024
Timely credit card bill payments go a long way in maintaining a healthy credit score and avoiding unnecessary fees. While making payments on time may seem like a simple task, many out there fall into common traps or miss out on the best practices that can make managing credit cards much easier. We have conjured up some do’s and don’ts of credit card bill payments that will help you manage things effectively.
The Do’s
Set up Payment Reminders: One of the go-to ways in never missing credit card bill payments is this one. The aforementioned reminders can be set up through your bank’s app or via SMS alerts.
Pay more than the Minimum Due: While paying the minimum due keeps you from being penalized, it’s always better to pay a fraction more than that – or the full balance – if possible. This practice helps in lowering your interest rates and paying off your debts faster. Only paying the minimum due can lead to a debt spiral and significantly increase the overall repayment amount.
Check your Statement Regularly: Make it a habit to look at your monthly credit card statement carefully. Look for any:
Reporting such issues early on will help resolve them in time and make sure that you don’t end up paying for something you shouldn’t.
Pay off your Bill before the Due Date: This strategy is particularly effective if you plan on making big purchases soon, as a lower utilization ratio reflects better on your credit score.
Monitor your Credit Score Regularly: Keeping track of your credit score gives you a clear picture of your financial health. Timely payments positively impact your credit score and make you more eligible for better credit offers in the future. Use credit monitoring tools or your bank’s services to get updated scores and reports periodically.
The Don’ts
Don’t Max Out your Credit Card: Using the full credit limit on your card adversely affects your credit score. Ideally, aim to keep your credit utilization below 30% of your total limit. Maxing out your card frequently shows a dependency on credit – a major red flag for lenders.
Don’t Ignore the Interest-Free Period: The interest free period usually falls between 20 to 50 days from the date of purchase. If you ignore this fail to pay the bill in full within this period, you might end up paying hefty interest charges on the outstanding balance.
Don’t apply for multiple Credit Cards at Once: Having multiple credit cards can increase your overall credit limit. But, applying for several ones at a time can negatively impact your credit score. Each application leads to a hard inquiry on your credit report
Don’t miss payments even if the amount is small: A missed payment, even if it’s a tiny amount can lead to penalties and a negative impact on your credit score. Always pay at least the minimum due to keep your account in good standing and prevent late payment charges.
With these do’s and don’ts in your toolkit, your credit card becomes less of a bill to dread and more of a financial booster.
