Rakesh Mehta and Pooja Bansal are co-workers in a manufacturing company with the same salary. Both were offered a credit card with the same limit of INR 1,50,000 based on their salary and credit record. While Rakesh enjoys his credit card journey with no interest liability, Pooja is riddled with heavy interest, forcing her to fall into the debt trap. We feel sorry for her and many who cannot enjoy their credit card journey because of the mistakes they commit unknowingly. Let this article act as a guide to your wonderful credit card journey with no interest.
Here are the Tips for No Interest on a Credit Card
A credit card is interesting. Pay the entire credit card bill on time and be relieved from the interest burden. The moment you pay less than the due amount or delay its payment by say a month, the interest will accrue at an astonishing 30-40% per annum. Seeing this peculiar nature, it’s important to be careful with your buying behaviour when using a credit card. Let’s check out how you can avoid falling into the debt trap.
Be Disciplined with Your Credit Card Purchases
Credit cards provide you with the luxury to shop from a wide range of products online and at merchant establishments. It is safe to say that credit cards are a perfect shopping partner for today’s earners. However, the privilege comes with the risk of the unknown if you stay casual in your buying approach. So, make sure to keep your purchases to an extent you can pay back comfortably on time. Evaluate your needs and check your income and liabilities before deciding to spend. Don’t spend more than 10-15% of your income on a credit card.
Accumulate Savings During an Interest-free Credit Period of 45 Days
Credit card purchases come with an interest-free credit period of 45 days. This is where you need to save more and ensure enough for full payment of credit card dues. This way, there will be no interest.
Never Take Cash Advance
While selling credit cards, bank officials might hype many features including the cash advance part. Yes, credit cards come with cash limits, allowing you to withdraw money from ATMs. The pitfall, however, is the astounding 30-40% interest from the point of instance. Here you don’t enjoy any interest-free credit period.
Keep Your Credit Card Utilisation Ratio to Below 30%
You might go gung-ho about expansive credit limits offered by banks on your credit card. Using too much of the credit limits will disturb your financial health. The bills will surge past your comfort zone, forcing you to make partial credit card payments and putting you in a high-interest debt trap. Make sure your credit card utilisation ratio does not go past 30% of the offered limits. Also, weigh your income before utilising it.
Conclusion
A credit card is an excellent way to meet all your shopping needs. However, don’t let your shopping partner bite you with a massive interest by using it way too much.
In case your bills are such that you can’t pay them in one short, think about converting them into EMIs. The EMI conversion option allows you to pay your debt at a lower interest rate of 14-20% per annum. However, banks may not allow conversions of all transactions into EMIs. They typically allow transactions not older than 30-60 days for conversion.
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