A Credit card is an incredibly useful financial tool. In an age where digital payments is the name of the game, not owning a credit card may mean that you are missing out on a lot of things. One aspect of credit cards that has consistently pulled many prospective customers from getting a credit card is the interest rate that is charged on the transaction. People often fear getting into the debt trap by reckless use of credit cards and thereafter having to pay huge amounts of money as interest. Fortunately, this can be very easily avoided. All you need to do to avoid falling into these trap is be well-informed about how credit cards work and their policies and rules. Once you are aware of those facts, you simply need to be financially disciplined and you are guaranteed to stay out of risk.
By learning about the working of credit cards you will soon realise that there are many ways in which you can avoid paying any interest at all or high interest in some cases. We have listed a few hacks to avoid paying high interests when using your credit card –
Pay the Full Amount If Possible
One misconception which has plagued many people in the country and the world is that you only need to pay the minimum amount payable on a credit card bill to avoid financial trouble. This is far from the truth. Any amount that gets carried forward to the next month is liable to addition of interest. Hence, you should try and clear the entire outstanding amount if possible. This will ensure that you do not pay anything on interest. If that is not possible then you must try and pay as much as possible so that the interest paid by you is minimum.
Make the Most of Interest-Free Period
One of the best features of a credit card is the interest-free period. This means that there is a period within which if you make full credit card payment for your expenditure, you will not be charged any interest. The period typically varies from 30 days to 45 days. However, the trick to use the interest-free period to your advantage is to maintain no debt. Once you have a roll-over debt from previous months, you no longer qualify for the benefits of interest-free period. So, make full payments each month, carrying forward no outstanding amount and enjoy credit card usage without paying any interest on your purchases. This is another reason why you should not restrict yourself to the minimum amount payable every month.
Everyone from time to time experiences financially difficult situations. This often leads to credit card debt. There is a tendency for credit card debts to go high during these times because carrying forward outstanding amount can lead to increased rates of interest. One way to avoid this is to use the balance transfer facility. Under this facility, you can use credit from one credit card to pay off the balance from another one. This is helpful when moving for a high interest credit to a low interest paying credit provider. By using this technique, you can ensure that you pay lower interest than before. One must however understand that this is not a solution. Getting into a habit of doing this on a consistent basis can have a negative impact on your finances as well as your credit score. Which means that you may find it challenging to get new sources of credit in the future.