Credit cards are a blessing when it comes to spending first and paying later options. It makes it one of the most desirable financial instruments as it gives you the leverage to spend and pay when you have the availability of funds. While it is a convenient option when you don’t have the cash in hand, it is essential to know the charges and fees applicable with the usage of credit cards so as to be a wise spender and to make the best use of it.
We have all noticed how credit card bills can shoot up over the months; realising this at the time of having to make a payment against any emergency or unexpected expense becomes an eye opener. Here are some common reasons why credit card bills tend to balloon up:
1. Credit cards give you the option of paying the minimum amount instead of the entire outstanding amount. The remaining outstanding unpaid amount is carried forward to the next month.
2. This evolves into a cycle and a habit that is hard to overcome.
3. In no time you end up losing track and start over spending your credit card limit. This typically happens during festivals, trips, medical emergencies, etc.
4. In case you have multiple credit cards, you are more likely to lose track of payments and due dates of all the credit cards. Not only would this mean a higher bill for the next month, but also would involve late fees and other additional charges.
Credit card companies offer “cash advance options as well. This means you are permitted to make cash withdrawals from these credit cards. A specific interest rate is chargeable on such withdrawals; which vary from vendor to vendor. If you avail the cash advance feature, you would incur additional charges and interest on the borrowed amount. Such kind of short-term cash loans from the ATMs or banks can prove to be expensive and it is only going to add up to the outstanding bill resulting in a flared up and long due outstanding bill.
Why is it essential to make Timely Credit Card Payments?
If you ever end up forgetting or neglecting the payments that are due on your credit card bills on the respective due dates, your credit score is going to be majorly impacted. A credit report records your debt and repayment history and this default would surely be noted. It also records whether you have outstanding loans or have defaulted on any other payments. The CIBIL TransUnion generates credit scores based on this report, and financial institutes or lenders usually consider this score while determining your credit worthiness. This is one of the major factors they consider to decide whether to give you a loan and at what interest rate to give the loan. A higher credit score would help improve your chances of availing a loan with favourable terms and conditions. Even when you apply for another credit card, the bank issuing the card will look at your credit score.
In case you find yourself struggling with multiple credit flaring bills, it may be the right time to opt for debt consolidation. There are multiple loan products specially designed to clear all outstanding dues arising out of credit cards. Personal loan and Credit card takeover loan come handy for the purpose of consolidating your debts.