How to control interest-free period in credit cards?
Naveen Kukreja
Paisabazaar
Sumit Chanda was enthusiastic when he was advised that the particular credit card allows anyone to avail interest-free period of 50 days. Sumit applied for that credit card and control his payments, and then discover herself spending significant money charges and late-payment fee on a monthly basis. Clearly, the interest-free grace period is not what he assumed it to be. Thus, what's interest- free period?
‘Interest- free period’ for a certain exchange could be the difference between deadline of the transaction for that payment cycle and the date of credit card transaction. During this period, you don't need to pay any interest, provided the complete outstanding by statement deadline is paid by you. For example, assume that Sumit’s payment period starts from the fifth of each month of every month, his due date falls on 24th of every month. If he makes a credit card purchase on 5th April, that outstanding amount can be repaid by him till May, without paying any awareness onto it today. To 50 times of ‘interest- period’ that is free, he can appreciate up in this instance. Nonetheless, if he enters right into a deal the last time of his payment routine, on 4th May, he will still settle it as a way to avoid paying attention to it. In cases like this, his interest-free interval calculates to become only 20 days.
How does your money be affected by it?
If you produce a credit card transaction, it is not you who pays for that transaction. Rather, it is the credit card company who pays in your stead and then you certainly repay the company possibly by the due date or thereafter. Therefore, if you spend Rs 10,000 via a credit card (instead of spending in money or through debit card) and acquired a pastime-free amount of 50 days, you're not simply financed by your card provider for 50 days, you may also earn precise interest around the sum by depositing it in a savings bank account. Essentially, you're not just currently utilizing someone else’s money at no cost, you are also earning a pursuit about it.
How can interest- free period be made good usage?
Go for high-value dealings in the beginning of the statement period: Firstly, you'll get time to more than the usual month’s to decide the expenses. Subsequently, you can earn a notional interest on it, assuming that that money has been parked by you in any curiosity or family savings.
Handle your dealings among multiple cards: You need to use these cards in a fashion to be sure that all the dealings take place at first of their individual billing cycles when you have numerous cards with diverse payment dates spread throughout the month. For example, think that you have two credit cards of each month with the billing date of 15th and 1st. For transactions happening between 1st and 15th, use ‘Card A’ as well as for dealings between 16th and 31st, use ‘Card B’. This may permit you to acquire maximum - free credit period’ for many deals.
