Posts Tagged ‘Interest Charges’

The first step in doing a credit card payment is to understand your monthly billing. The following are terms you will encounter:

Statement date The date that the bill was printed.

Payment due date this is the day that the cardholder must pay any outstanding balance. Payments made after the said date will be credited, but will also be fined a lateness fee.

Total Amount Due It consist of the unpaid amount from the previous month, as well as purchases, payments and interest charges for the current month. When the cardholder pays this amount on or before the payment due date, no interest charges will be imposed.

Minimum Amount Due this is a smaller fraction of the total amount due. To maintain a good standing with the card company, pay at least this amount, if you cannot afford to pay the total amount due.

Finance charge if the cardholder is not able to pay the total amount due, then he is charged a fee for borrowing money from the company. It is calculated based on the interest rate of the card. For detailed information on how this is calculated, go to http:www.abcguides.comcreditcardscci_faq.htm#finance_charges.

Late charges Paying or not, after the payment due date, is penalized with late charges. Avoid this as much as possible as this is almost 2X the interest rate of the finance charge. Consistently missing payment may lead to cancellation of the card and a bad credit standing.

Having understood the information on your monthly bill, here are simple strategies for paying your credit card charges:

Always pay the total amount due. Paying only the minimum amount due means being charged for a high interest rate on the unpaid amount.

If you cannot pay the total amount due, pay as much as you can above the minimum amount due. This strategy aims to reduce the finance charges that you have to pay for settling partially.

Do partial payments as early as possible (as soon as you receive the billing). Finance charges are based on the unsettled amount and the time it remains unsettled, so the shorter it is, the lower it will be for finance charges.

Some card companies reward loyal cardholders by accumulating points for their spending. Check if reward points can be credited back as payment.

Lastly, pay the total amount due. Just to emphasize the point!

There are many avenues to pay your card bill. Theres the traditional way of waiting in line, or the faster way of paying electronically through your computer, cash machine or mobile phone. With all these conveniences at hand, it is quite unforgivable to miss your payment due date.

Therefore, settle smart: pay the total, pay on time.

Almost all credit card holders are aspiring for a higher credit card limit. This is because a higher credit card limit will enable them to make otherwise unaffordable purchases. Credit card holders need to remember that to get a higher credit card limit; they must abide by the terms and conditions of the credit card company or bank.

Below are other ways to get a higher credit card limit.

The most important thing to do to get a higher credit limit is to prove your creditworthiness. This is the number one thing banks and companies look for in giving a higher credit limit.

Attract positive attention from the credit card company or bank by paying finance purchases once in a while. However, it is not advisable to make this method a habit and should only be done as a last resort to increase your chances of getting a higher credit limit.

Proving credit card companies and banks that you are good borrower would definitely convince them to give you a higher credit limit. But be careful as such strategy could only serve the benefit of the companies and banks. A higher credit card limit means greater purchasing power but it also increases the potential of the credit card companies and banks to earn through you through increased interest charges and other fees.

Always spend within your credit card limit because doing so means that you are capable of controlling your expenses.

Use your credit card regularly. Dont keep your cards for emergency use only. If you sue your credit card sparingly banks and credit card companies will be unable to understand your spending and pay back behavior and would be reluctant to give you a higher credit card limit.

Never make minimum payments. Instead, try to pay for the entire outstanding amount. This would give you better chances of getting a higher credit card limit.

Avoid late payments as much as possible. Not only do you increase your interest, you also have to pay an additional fine for not clearing bills on time. This would dim your chances in getting a higher credit card limit.

The best and simplest strategy to get higher credit card limit is to use your credit card wisely. Always keep in mind that credit card companies keep a record of your transactions and payment pattern so always pay your dues on time and never make late payments. Your performance in the records of banks and credit card companies will determine whether youll get a higher credit card limit or not.

How To Avoid High Interest Charge on Your Credit Card

There is a credit term call grace period its a period within which you may pay your bill without being charged interest. Its usually a period of 25-30days before interest kicks in. Recently, most issuing companies are eliminating this grace period and instead offering a low fixed interest rate. The question now is which one is better between grace period and low fixed interest rate?

It will be a bit difficult to have one answer that will favour everybody. Some prefer paying their bills in full within the normal grace period. To this group of people the grace period will be better. It will be advisable for them to shop for grace period cards and avoid no-grace-period cards.

Some banks do charge interest from the day they process your charge slip when you use your card to get cash. If you normally pay your bill in full you still need to shop for card that offers very low interest rate plus grace period, if you are to avoid interest charges on your account. However, for those that usually carry a balance each month, the low interest rate will be good for them. If you are in this group you can even shop for institutions that periodically offer cards with no fee for the first year.

Most issuing company often offers premium credit cards such as goldcards and Premier VISA. They are fancy cards that come with travel insurance benefit and extra protection when your card is lost or stolen. These institutions will rarely use the highly annual service fees which you will be subjected to as their marketing point. So its advisable to beware of these cards. There is no reason for paying such high service fees. As a matter of fact it did not really worth it if you can have a lower interest or grace period card.