8 Tips to clear your Credit Card Bills on Time

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Credit cards offer an instant solution to cardholders with most of their purchases and problems. Almost all banks offer a wide range of credit cards for different needs.

Credit cards, when used recklessly, are a certain one-way ticket to a debt trap. It is a common problem that the credit card bill squeezes the liquidity during the starting days of the month. To manage the expenses, you again go for credit card shopping. Hence, the cycle continues. This is what happens with just one credit. The problem multiplies with the increase in the number of credit cards; it may dent your credit profile. 

1. Note all the Debts to be paid

Instead of looking at your credit card bill at once, which is a lot, break it down into smaller parts. This helps you to categorize it. If you hold more than one credit card, it is advisable to pay off the bill which is on priority.

Now how do you differentiate which bill needs to be paid first? It depends on two criteria which is the interest rate of the card and the outstanding bill.

2. Convert Outstanding Bills to EMIs

It is an easy source to convert the outstanding bills into EMIs. The banker will charge the processing fees on such conversion. The rate of interest depends on the tenure chosen. The chosen EMI becomes the bill amount for every billing cycle. However, your credit limit will be reduced by the outstanding amount converted into EMI. The credit limit restates once you pay the EMIs. Banks, however, charge a monthly interest of 2-3% for allowing the EMI facility. There will be also a processing fee, which will be around 1-2% of the outstanding amount.

3. Reduce the Credit Card Utilization to 30%

The credit utilization ratio refers to the ratio between the credit card bill and the overall credit limit. Using the credit card to the last penny implies your credit hungriness and may compel the rating agencies to reduce your credit score. Thus, credit card utilization up to 30% is a decent range of spending. It will help boost credit scores quickly. Stop buying anything which is unrequired at present. However, it does not mean that you should never use a credit card. If you spend within the ratio, it is appreciable.

4. Pay more than the Minimum Amount

Paying just the minimum amount is a practice followed by many card holders. The mounting debts as a result of this cause many borrowers to get locked in unending debt spirals. Also remember, credit cards come with a very high interest rate and paying only the minimum due amount is only increasing your outstanding amount significantly at an exponential rate, depending on the outstanding amount.

5. Take a loan to Pay off Credit Card Debts

If your credit card bills are too much to pay off even in installments, there is another option by which you can pay it off at one shot.

If you have a good credit score, you can apply for a personal loan to clear off all your credit card bills at one go. In this way, you can be debt free and will be paying lesser interest. Personal loan interest rates are comparatively lesser than credit card interest rates. Apart from this, depending on the tenure, your monthly EMI will be a nominal amount as well.

6. Consider opting for Automatic Payment Facility

Since credit cards come with high interest rate and late payment fee, opting for an automatic payment facility is recommended to avoid missing bill payments on time. This way, the bill amounts may get deducted from your account without your manual intervention and you need not worry about missing repayment deadlines even if you are travelling or not having access to your bank.

7. Limit the number of Credit Cards

You may get offers for new cards from the sales executive visiting your office and from the innumerable mails being sent to you by various banks.

8. Use your Offers and Discounts

Ensure using your credit card if there are offers and discounts applicable. After utilizing the offers, pay for the said amount quickly. Don’t wait for the card bill. This way, you can use the credit card, get benefits from the offer and enjoy a no-bill credit card.