The popularity of Credit Cards need not be stressed further, and the reasons are apparent. However, before applying for one, you need to keep a few things in mind, and Credit Card interest rate is one of them.
The interest rate is not typically connected to the user’s repayment capacity or credit score. All Credit Cards have a set charge that remains the same for every card. Most cards charge interest if a customer cannot pay their bill in full every month. The Credit Card company can then charge interest on the unpaid balance. This is how Credit Card interests are charged.
When Are Credit Card Interest Rates Charged?
Scenarios where the Credit Card company charges interest are as follows:
- When the customer does not make any payment.
- When the customer pays only the minimum due amount.
- When the customer pays a lower amount than the total due amount.
- When the customer withdraws cash from an ATM using a Credit Card.
These situations will need you to pay interest on your Credit Card bill. So if you do not want to pay interest rates on your card bills, try to avoid the aforementioned situations in the first place and manage your finances smoothly.
Ways to Reduce Credit Card Interest Rates
You should be aware of the ways that can help you pay less interest on your card bill. They are as follows:
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Pay the outstanding amount before the due date
On most Credit Cards, you will have to pay at least 5% on any outstanding amount, and the balance will roll over to the next month. However, to avoid paying additional charges and accumulating debt, try to pay the full bill on the due date. If you cannot pay the amount by the due date, taxes and interest charges will be applied along with a late payment fee.
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Try to do a Balance Transfer
If you cannot pay the Credit Card bill in full, choose a Balance Transfer. This can also benefit you if you have multiple Credit Cards. You can transfer your balance to another card that has a lower interest rate. The main objective of doing this is to save on interest payments every month. However, doing this can include some additional charges.
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Turn it into EMIs
Sometimes, it can be difficult to pay the entire amount if the Credit Card bill is high. In such cases, you can turn them into EMIs at a lower rate of interest than what you need to pay on your card. To avail this benefit, you must inform your Credit Card issuer and complete the associated formalities.
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Return cash withdrawals as early as possible
If you ever need to withdraw cash from an ATM using your Credit Card, ensure repaying it as soon as possible. This is because these withdrawals do not contain any interest-free period. It will start accruing interest from the moment you withdraw the cash. Furthermore, there can be a one-time fee that you will need to pay. Hence, try to use this facility as little as possible.
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Try not to use Credit Cards abroad
A Credit Card abroad can be used for making foreign currency transactions, but it can be expensive. If you use a card overseas, conversion charges will be applied. Moreover, if it is used at an ATM, an extra fee will be imposed. The conversion charges can range between 3%-5%.
The ideal solution is to contact your financial institution and get a travel-specific Credit Card. Such a card might not have such additional charges.
These are a few ways that you can follow to pay fewer interest charges on your Credit Card debt. However, there are some more pointers besides the interest rate that you need to know before applying for a Credit Card.
Things to Check Before Applying for a Credit Card
Here are some other factors to review before you apply for a Credit Card:
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Eligibility criteria
You must review the eligibility parameters a Credit Card company sets before applying. If you meet the criteria, then go ahead and apply for the card.
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Additional charges
Apart from the interest rate, a Credit Card can entail additional charges like processing fees, joining fees, annual charges, etc. However, there are some cards which don’t ask for joining or annual fees.
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Terms and Conditions
Every Credit Card comes with a set of terms of usage. So before applying for one, you need to review them thoroughly to avoid any problems in the future.
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Reward and benefits
Lastly, you need to take note of the reward and benefits offered by a Credit Card before selecting one. This will ensure that you get the best benefits as a user.
How to Apply for a Credit Card Online?
Now that you know what to keep in mind before applying for a Credit Card, here is how you can get it online:
Step 1: Head over to the official website or mobile app of your preferred Credit Card provider
Step 2: Fill out the application form and the necessary details and provide all the soft copies of the required documents
Step 3: Review the form and submit it
After this, the Credit Card company will verify your documents and notify you regarding the approval or rejection of the card.
To Conclude
Credit Cards are undoubtedly a very beneficial way to manage your finances. But before applying for one you should always be aware that it is ultimately a loan, and failing to repay it can have repercussions. So use it carefully to avoid any problems.
Author Bio
I am Zoya Arya, and I have been working as Content Writer at Rananjay Exports for past 2 years. My expertise lies in researching and writing both technical and fashion content. I have written multiple articles on Gemstone Jewelry like Moldavite ring and other stones over the past years and would love to explore more on the same in future. I hope my work keeps mesmerizing you and helps you in the future.
