Why Should You Pay Your Credit Card Bills Before Due Date?

Credit cards have become a common phenomenon these days. But not too many people know about the right measures to be taken while using a credit card. For example, many of you might think that you can only pay the minimum due and carry forward the balance thereby helping you save yourself from interests! Well, if you’ve been thinking that not clearing your credit card bills in complete amounts help you save interest payments, let us keep you informed that you are wrong. In fact, paying off your credit card dues before due dates is a sign of a great financial habit. It keeps you away from falling in a long-term debt trap! Moreover, did you know, clearing off your credit card dues also helps you win attractive benefits on your credit card? Let us look at some of the top reasons to pay off your credit card dues right on time!

·    Improves your Credit Score – Paying off your credit dues is a great and effective tool to boost your credit score. It shows that you are a responsible individual, and have complete control over your financial position. In the long-term, if ever you are in the need of a loan, a good credit score shall make your loan approval process a lot easier!

·         Helps you plan a budget – If you want to manage your personal finances skilfully, you must do a proper budgeting. Once you make the credit card bill payment, you will know how much money you have left at hand. This in turn helps you plan and cater to your other financial commitments. If you end up avoiding your credit card dues and continue spending on other areas, you might have to pay higher interests on higher amount of dues.

·         Lowers your debt to income ratio – The ratio of your monthly in-hand income and the debt you owe is referred to your income-to-debt ratio. For example, let us assume that your monthly income is Rs. 50,000 and your debt is Rs. 10,000. In such a case, your debt-to-income-ratio is 20%. Ideally, your debt-to-income ratio should not exceed 40%. If it is higher than that getting any further loans easily might become a problem. Now, paying off your credit card dues helps lower your debt to income ratio.

·         Expands your credit card balance – When you pay off your credit card bills on time, it frees up your credit card balance. So, the amount you pay is the amount you can borrow again! This way you can use your credit card balance again and again.

·         Avoid Interest Charges – If you do not clear your credit card dues, you shall have to end up paying a fortune on interest payments and late penalties. So, if you have enough funds, it is better not to procrastinate paying your credit card dues.

So you see, how you use a credit card is a crucial aspect of maintaining a healthy financial credibility. Make sure you pay off your credit card dues on time and do not let your financial health suffer in the long run!