How to manage your credit card dues prudently

May 21 2013, 02:44 IST
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SummarySwiping your credit card is always easy, but managing and repaying the dues is not.

Swiping your credit card is always easy, but managing and repaying the dues is not. Most customers are unable to manage and repay their bills due to sloppy spending habits and negligence about the mechanics of credit cards. Here, we will look into each of these issues and ways to overcome them.

Know the basics

Nothing starts working well without understanding the basics; the customer should take care to understand basic terms and conditions by going through the fine print. Knowing basic terms like billing cycle, minimum amount due and grace period is indispensable for managing both spending and repayment patterns, and any negligence on our part could result in spiralling interest costs. Any sound repayment strategy starts with strong basics.

Stop erratic spending

Today, most purchases have become slicker than we might think due to the advent of shopping malls and online shopping marts, and as a result, we end up in a spending spree. A manageable debt always follows a controlled debt and, hence, it is imperative to stop sloppy spending habits. The above discussed points constitute the basic requirements to effectively plan and manage the repayment of credit card dues because even the best repayment strategies fail without good debt control.

Pay dues within the billing cycle

The first step is to ensure that the debt or the interest costs do not spiral out of control and a sure way to do this is to ensure that the entire outstanding amount is paid within the billing cycle or the provided grace period. This is easier said than done, but many card holders use this strategy effectively by timing their purchase and repayment within the billing cycle.

You could also become a convenience user by paying off all your bills within the grace period without any interest, but this option comes into effect only if the previous bill is also settled before the billing cycle or grace period.

Convert dues into EMIs

In case of big-ticket purchases, a cardholder can convert his purchases into equated monthly instalments. This option works like a consumer loan where the loan amount plus the interest component is converted into EMIs and repaid over a period of six to 24 months as monthly instalments. Not all purchases are eligible under this option: The total purchase has to cross a minimum threshold limit and, in some cases, the purchase has to be only from specified merchant outlets. The

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