In today’s era, credit card is not just a payment tool but has become a part of lifestyle. Be it online shopping, electricity or water bill or any sudden medical expense, credit card provides immediate relief. But this facility becomes a headache when payment is not made on time and the interest rate reaches 30 to 40 percent. Many people keep paying only the minimum amount due without understanding and gradually get trapped in the debt trap. So how to avoid such traps, let us know.
Pay on time and in full
The most effective way to avoid credit card interest is to pay the bill in full every month. If full payment is not possible, deposit more instead of just paying the minimum amount. This will reduce the outstanding balance quickly and the impact of interest will also reduce.
Don’t hesitate to talk to the bank
Many cardholders do not know that they can request their bank to reduce the interest rate. If you have a good credit history and have been making timely payments for a long time, the bank may offer you a lower interest rate or better terms.
Balance transfer can become a way of relief
If the interest on your card is very high, then the option of balance transfer can be adopted. Many banks offer balance transfer facility at low or zero interest for the initial 3 to 6 months. This gives you a chance to repay the old loan.
It is also important to choose the right card
While getting a new credit card, don’t just look at the rewards or cashback, but also check its interest rate. Low-interest cards put less of a burden on your pocket in the long run.
Save late fees with auto-debit
Many times payment gets delayed just because of forgetfulness. In such a situation, turn on the auto-debit facility, so that payment can be made on time and late fees and penalties can be avoided.
Why is high interest dangerous?
Suppose you spend Rs 50,000 and the interest rate is 36%. If payment is not made on time, this amount can reach Rs 68,000 in a year. That means a loss of Rs 18,000 only in interest.
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