iDentistry The Journal identistry_may_aug2019 | Page 30

The Journal
Ideal would always be to pay all bills on time and
in full as per the monthly statement. We can do
an ECS with our bank to pay the card bill by a
certain date every month. Even one late
payment can raise our interest rates on certain
credit cards. If we are having cash crunch and
are strapped for money, at least, pay up the
minimum charges so that there is no penalty or
similar charges. Paying the minimum amount
due would harm us in more ways than one. The
biggest negative aspect of paying just the
minimum amount due is the accumulation of
high interests because the minimum amount
due is just about 5% of the total amount due and
the interest on the unpaid amount would be very
high. This also implies that we would find
ourselves in a debt trap in the near future. On
the flip side a positive is also there that paying
more than the minimum amount due would also
help us maintain a low credit utilization ratio,
which, in turn, would help us in building a solid
credit history. Paying in full means we don’t pay
a penny of interest and we also gain interest on
the cash we hold on to from the time we make
our purchase, to the time, our statement
becomes due for payment. That is roughly up to
50–51 days in interest gains on our own cash
which we use for making payment. Another tip
would be to avoid making a non–essential
purchase while we are still in credit card debt
(means we paid just the minimum amount). If
we are not disciplined enough to limit what we
spend when paying with a credit card, the best
solution is to pay for everything in cash or with a
debit card while we are paying off our credit card
debt. Also, a perfect approach would be that
when we get towards the end of our cycle, it
pays the best to hold off on major purchases, as
by delaying our spending just for a few days, we
can gain an additional month of time (50–51
days actually) until our payment gets due for
that purchase. One of the primary points to bear
in mind is the timely repayment of the credit card
dues. This is crucial because our experience of
using credit card depends on it. We should
always ensure that the card dues are paid by
the due date.
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4. Controlling your desires:
There is no limit to what a heart of a person can
desire especially when it comes to being thrifty.
Controlling our expenses and spending only as
much as we can comfortably repay in full at the
end of the month should be the requisite norm. If
we can’t do that, opt for payment in EMI’s where
the interest charged is comparatively lower at
12–18%.
5. Use credit cards for your usual
purchases.
Using credit cards for normal purchases makes
sure we earn the rewards that would otherwise
have been looked over. Do not over spend on
things we don’t need just to earn reward points.
6. Avoid cash withdrawals as much as you
can:
This is a very costly option so it is best to avoid
cash withdrawals, except in an acute
emergency. Also, don’t make too many small
withdrawals and best practice is to withdraw the
amount once as per the mentioned cash limit
without crossing it. Repeated small withdrawals
can lead to higher fixed charges as well. So,
avoid cash advances at all costs and please
remember strongly that our credit card is not an
ATM.
7. Know the important limits and milestone
markers of the credit card:
Many credit cards offer annual fee waiver on
meeting a certain amount of annual
expenditure. Still others offer bonus reward
points on passing an expenditure milestone.
Knowing the limits and milestones associated
with our credit card helps us maximize the
returns associated with our credit card.
8. Sticking to your budget:
When making monthly purchases, using credit
Vol. 15
No. 2
May-Aug 2019