Nowadays, credit cards play a vital role in our financial lives as most of individuals consider it a basic need to have a credit card. What attracts customers the most is not only the credit limit but also the rewards and benefits that are offered by different card issuers. Almost everyone is aware of the advantages of having a credit card as long as one uses them responsibly.
However, not everyone knows how to use a credit card to get the maximum benefits out of it. Choosing the right credit card and earning rewards & bonuses is all good, but what comes next is to make the bill payments on time without any defaults. If you are a credit card user, you might be aware of all the charges associated with a credit card, including the interest rate. But, have you ever thought about how can you avoid paying interest on your credit card?
Many individuals, generally who don’t use a credit card, believe that credit cards make you fall into a debt trap as there are heavy interest charges associated with them. But, it needs to be understood that you need to pay interest only if you don’t pay your bills on time. Cardholders who are wise enough to use a credit card, make all the bill payments on time and don’t pay any interest ever in their credit journey. Using a credit card gets you the maximum benefit only when you make the best use of rewards and avoid all the unnecessary charges like the interest rate.
Also Read: 4 Steps to Pay Off Credit Card Debt
Tips To Avoid Paying Interest On Your Credit Card
If you are not aware of how you can avoid paying the interest on your credit card, this article will help you understand the same. Following are some of the tips that you must follow to make the best use of your card by avoiding the interest charges:
Make Your Credit Card Bill Payments in Full Every Month
If you really want your credit card journey to be interest-free, this is the most important thing to be kept in mind. Credit Card issuers provide their customers with an interest-free period, which generally consists of 45 to 50 days. It consists of the 30 days of credit card billing cycle and then a grace period of 15-20 days. If you don’t know what a grace period is, it is the time period that your card issuer gives you to pay your credit card bills. The Grace period can also be defined as the time period between the statement generation date and the payment due date. So, the interest is not accrued on your transactions instantly, but your card issuer gives you sufficient time to make the payment.
You might be thinking that paying only the minimum due amount is enough, which is one of the biggest credit card myths. If you pay only the minimum amount, you can avoid the late payment charges, but interest charges will be accrued on the rest of the amount. Therefore, to avoid the interest completely, you should try to pay your credit card bills on time and in full every month. If you don’t pay your bills in full, the interest will not only.
Suggested Read: 7 Most Common Credit Card Myths Damaging Your Credit Score
Make Big Purchases At The Beginning of a Billing Cycle
As discussed above, no interest is charged on credit card purchases during the billing cycle and the grace period. If you are planning to make some big purchases with your credit card, it is advisable to make them at the beginning of a billing cycle. It is because you will get almost 50 days to pay your bills without any extra charges. For example, if your billing cycle starts on the 15th of May and ends on the 14th of June, and your payment due date is the 5th of July, you have an interest-free period of 50 days. Now if you make a big purchase on the 15th of May, you have more than enough time to repay the amount as the payment due date is the 5th of July.
On the other hand, if you will make the purchase in the middle of a billing cycle like on the 10th of June, you will be left with only 25 days to pay your bills. Sometimes, people don’t keep this thing in mind and then find themselves unable to pay the bills in such a less time period and interest starts accruing on their outstanding amount as a result. Therefore, you should try to make the best use of the interest-free period to avoid paying interest on your credit card.
Convert Big Transactions Into EMIs
If you have spent a really big amount that is unable to pay all at once, it is never a good idea to carry the outstanding forward. It will not only invite interest charges, but you will also be unable to get the benefits of the interest-free period in the next billing cycle. You should instead try to convert your credit card bill into EMIs and then you can pay your bill easily in parts without getting your credit score hurt. However, always make sure to check a few things, like the processing fee, interest being charged, if no cost EMI is available, etc, before converting your bills. It will always be a good option if your card issuer is providing no-cost EMI, but if an interest is being charged on the same, make sure that its is not higher than the normal interest rate on your credit card.
Avoid Making Transactions That Are Not Eligible For Interest-Free Period
Also, to make the best out of your credit card, make sure that all the transactions you are making using your card are eligible for the interest-free period and you have enough time to repay them. Some transactions like cash withdrawal are not eligible for any interest free-period, i.e, if you have withdrawn cash using your credit card, interest will start accruing on it from the very next day. So, even if you are withdrawing cash from your credit card in an emergency, make sure to repay it as soon as possible to avoid heavy interest charges.
If you are a credit card user and want to make get the maximum benefit out of your card, you need to make sure that you are using your card responsibly. Be wise enough to make most of your purchases at the beginning of a billing cycle so that you get sufficient time to repay your bills. Talking about the transactions, like the withdrawal, which are not eligible for an interest-free period, try to avoid them as long as you can. This is how you can avoid paying interest on your credit card.