By Pay the credit card bill in full at once. Sometimes if we don’t have money in hand, minimum amount attracts us.
Pay the credit card bill in full at once. Sometimes if we don’t have money in hand.. minimum amount attracts us. Many choose it to reduce financial stress. Even if we get some relief now and then. it will help our financial health.
It is common for credit card users to use the minimum payment facility at some point It may be chosen for adjustment for one month or two months by accident But, if this continues every time. the financial burden is inevitable. A fixed percentage of the outstanding amount, applicable interest and fees are included. Along with these some invisible expenses have to be borne. It should not be ignored that if the credit card is not managed properly, it becomes financially dangerous.
The calculation is..
For example. Let’s say you ove a bill of Rs. 20 thousand on a credit card. A minimum payment of 5 percent is required. That is Rs 1000. The remaining Rs. 18000 will be transferred to the next month’s bill. Interest will be levied on the total amount of Rs. 20 thousand as per the rules of the card company. Additional fees are also included
Let’s see another example. If there is a balance of Rs 50.000 on the credit card the minimum amount of 5 pescent is Rs 2,500. Assuming an annual interest at 30 percent on the outstanding amount, it Rs.1500. If you add Rs. 100 late fees to this you will have to pay a total of Rs 4100 The interest burden is less when the aitonats are small. But if the outstanding balance is up to Rs 1 lakh it is necessary to pay Rs. 3,000 to Rs. 4,600 per month in the form of interest.
In urgent situations..
The minimum amount payment facility should be availed only in certain special cases. This is better than not paying the whole amount.
If the credit card bills are late, you will have to pay a huge delinquency fee. In this case this burden can be avoided by paying the minimum amount
It is not possible to delet more months without paying the dues. This may damage your relationship with the bank It will become a problem in future.
If the bill payment is not completed on time, the credit score will be adversely affected along with the hunden of late fees and interest, Paying the minium amount can ensure that the credit score does not go down
Make sure you have the option in convert it into monthly installments when you have a larger payment. Interest will be up to 14 percent on this
Losses are more..
Paying the minimum amours on the till will provide wome temporary reliel. But it will outweigh the loss an the long run
Interest Burden: If you are paying the minimum amount, you will have to bear the interest burden first. Credit cards usually charge a high interest rate. Some banks and card companies charge 36 to 48 percent interest on the outstanding amount. You may have to struggle to pay it off.
Debt crisis: If you keep paying the bill at a fixed percentage, you may never get rid of the debt. Interests and fees are added to each other. There is a possibility of going completely into debt. This debt becomes a chronic burden.
High limit: It is always better not to use more than 30 percent of a card’s limit. If the bill is not paid, the card spend ratio will always be at maximum level. This affects your credit score.
Being financially disciplined is always necessary. Be more careful while using cards. A complete understanding of card billing should be developed.
