5 Benefits Credit Card Holders can Enjoy for Paying their Bills
Financial institutions provide various rewards when you make credit card bill payments routinely within the due date or the grace period. These rewards can be anything from discounts and gift vouchers to several complimentary services and exclusive offers. Other than these, you can also benefit with better financial alternatives for the future if you make timely repayments of your bills today.
Let’s take a look at the various advantages to pay your credit card bills.
- It reduces the interest you have to pay – Making your credit card bill payment on time can help you avoid interest rates on the credit taken.
You can also take advantage of the grace period and avoid the burden of paying interest. Grace period is the time span between the end of your billing cycle and the next due date. It typically ranges from 21 to 25 days, and a user can pay his/her credit card bill within that time without paying any interest.
- It can improve your credit score – Timely credit card bill payment can significantly improve your CIBIL score. Your history of repayments is an important factor, contributing to 35% of the total credit rating. That’s why you can improve your credit score with consistent and timely credit card payments.
You can set a limit on your monthly expenditure to ensure you don’t overshoot your budget and delay bill payments. Refrain from making an expensive purchase with the credit card. Also, avoid paying only the minimum due amount as it adversely affects your credit rating.
- It frees up your credit line for future transactions – Whenever you meet the maximum amount of your credit card bill payment within the due date, the amount is automatically added to your total credit within 2 to 3 working days. It frees up credit on your account and allows you to utilise it for future purchases. It can prove especially helpful if you are reaching close to your credit limit.
Ideally, you should not spend more than 50% of the limit. Credit bureaus will consider you credit hungry if you regularly exceed that threshold. It can negatively affect your credit score as well.
- You can enjoy a higher credit limit – Credit card issuers are more likely to offer you a limit increase if you have a history of timely bill payment and no defaults. Higher credit limit brings several advantages as it provides you with more funds to cover your expenses. It will also lower your credit utilisation ratio which can help your credit score to increase.
- You can earn reward points – Financial institutions run various reward programs to attract their customers and make more transactions through their credit cards. These are generally offered as reward points which are redeemable for discounts, offers, and gifts. You can also convert these points to earn cashback and save money on your credit card bill payment.
The Bajaj Finserv RBL Bank SuperCard comes with attractive reward plans with up to 2 points for every Rs. 100 spent on online or offline spending. It also comes with welcome gifts and milestone bonuses where you earn points on signing up for the credit card and reaching certain spending limit.
Bajaj Finserv also provides with pre-approved offers on credit cards, personal loans, business loans, home loans, and a range of other financial products. Such schemes help you save time as these simplify the process of getting finances. You have to share some necessary details to check your pre-approved offer.
There are a few things you should be aware of while paying your credit card bills. The amount you borrow should never exceed your budget as that will strain the repayment. If you cannot pay the total outstanding amount within the payment date, it will carry over to the next billing cycle and might accumulate debt.
Also, be cautious about your credit card statement. Go through the details every month and check for any miscalculation or unknown transaction. The report carries a lot of information like the payment due date, total due amount, statement period, available credit limit, details of all the transactions, additional fees and charges, number of reward points accumulated, etc.
All these play a critical role if you want to use your credit card wisely. You can also track your expenditure with a credit card statement as it carries a detailed record of all the transactions made.
Therefore, you can enjoy several benefits and rewards if you use your credit card sensibly and make a habit of timely repayments. It can help you become a financially responsible person and save a significant amount of money in the long run.