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Benefits of paying your credit card bill before the due date

According to the Reserve Bank of India’s latest credit card data, a whopping amount of Rs.1 lakh crore credit card loan is at risk. Due to this predicament, experts believe that financial institutions will become more cautious when it comes to tackling credit card defaults and may even encourage cardholders to pay their bills before the due date.

Regardless, individuals must note that besides avoiding the risk and repercussions of credit card default, early payments can benefit users in several ways. For instance, RBL credit card payment impacts the users’ CIBIL score positively.

To understand how paying off card dues early works in favour of an individual, he/she should learn more about the accompanying benefits.

Perks of paying credit card dues early

Typically, delaying payment card dues attracts late fees and may also increase the interest burden.

On this note, the pointers below elucidate the benefits of paying bills early –

  • Helps to free line of credit Paying credit card bills early often comes in handy to free up some line of credit on users’ accounts. For instance, when an early RBL credit card payment is made, the amount paid gets added back to a cardholders’ account automatically. It proves useful in a scenario when an individual is close to maxing out on their credit limit. Early payments also minimise the risk of getting future purchases declined due to overshooting the approved limit.
  • Eliminate the interest burden Typically, clearing credit card dues before the statement closure helps eliminate the risk of accumulating interest. Generally, it is because clearing dues before the closure lowers the average daily balance. You can say, if one has a low balance for the maximum number of days, he/she will attract a lower charge from their financier. Nevertheless, financial institutions can compute this minimum payment in different ways. Individuals must, thus, make it a point to find out more about its calculation and streamline it accordingly. Furthermore, they should look for other ways to reduce credit card interest rate and save money more effectively.
  • Boosts credit score As much as 30% of one’s CIBIL score is based on his/her credit utilisation. Since credit utilisation indicates the portion of credit used against the set limit, cardholders should streamline their expenses made through the card accordingly. In other words, paying off credit card bills early lowers the credit utilisation ratio, which in turn will boost cardholders’ credit score. Those who tend to exceed this utilisation ratio should find out useful tips to increase credit card limit and make higher spends.
  • Facilitates effective budgeting The general notion here is that paying bills earlier helps to streamline budgeting. In fact, it is considered to be an effective means of staying under budget. Regardless, this particular benefit depends on how well a cardholder manages to ration subsequent spending in a given month. Other than these, paying off credit card dues earlier minimises the risk of defaulting to a great extent. As a result, it helps users to maintain a healthy credit record.

When is an ideal time to settle credit card bills?

The ideal time to pay off credit card bills in full is most definitely either before or on the due date. Individuals must note that delaying payment beyond the due date and grace period can impact your credit score negatively and accumulate interest on the outstanding amount.

Also, if only a portion of the bill is paid out early, cardholders will need to pay off the minimum amount by the due date of the statement to avoid a late fee and associated charges.

However, suppose cardholders decide to carry the balance forward into the next month. In that case, they should make a payment of a significant share of the amount due, to lower the credit utilisation ratio to some extent.

To facilitate the same, one may consider availing a payment card like Bajaj Finserv RBL Bank SuperCard that accompanies flexible payment options and reasonable charges. This makes RBL credit card payments easier to manage.

Also, leading financial institutions offer customers lucrative pre-approved offers to make the process of availing financial products more hassle-free. Generally, such pre-approved offers accompany credit option like personal loans and business loans. You can check your pre-approved offer now by simply entering your name and contact number.

Hence, by making an early credit card payment, you can save on interest, improve credit score and free line of credit successfully. On top of it, availing a card that accompanies reasonable charges facilitates better budgeting like how RBL credit card payment usually does.

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