If used judiciously, a credit card provides an excellent opportunity to avail interest free credit during the free credit period before the due date of bill payment.
On the other hand, if the entire bill amount is not paid on or before the due date due to overspending, loss of income or any other reason, it may lead to late payment penalties, higher interest rates, bad credit scores, and card deactivation etc.
“Over recent years, there has been a lot of fiscal unsteadiness. As COVID-19 seemed to be subsiding, the cost of living shot to a whole new level. And, resultantly, we found ourselves straining under the budget crunch, again, as we thought we were beginning to recover fiscally. Indians needed to borrow money because their income was depleted due to the pandemic,” said S Ravi, Former Chairman of BSE, Founder & Managing Partner of Ravi Rajan & Co.
“According to the Reserve Bank of India’s most recent statistics, there were over 76 million credit cards outstanding in the month of May 2022. This represents a significant increase of 23 per cent over May 2021 and an increase of more than 100 per cent over May 2018 as per figures,” he added.
Ravi suggests the following tips for those due to pay their credit card bills to avoid any ramifications that may disturb your financial status further and longer:
- Spend your money wisely and make every effort to save money.
- Always have 3-6 months’ worth of expenses in emergency savings.
- For immediate financial relief, obtain a balance transfer credit card or a debt consolidation loan.
- Zero percent APR credit cards give a longer interest-free term of more than a year.
- Set early reminders and pay off the minimum at least.
- Use a credit card wisely as it also affects your credit score with CIBIL.
“The RBI approved a second moratorium on May 5, 2021, due to the challenges faced by individual borrowers during the second COVID wave. Deferment plans should only be chosen, nevertheless, if absolutely necessary. Otherwise, if you have enough money to spare, keep paying your credit card bills without choosing a moratorium,” said Ravi.