Credit cards are a crucial financial product which increase the purchasing power of the user with the help of a line of credit made available by the issuer. Also, there are a wide range of benefits associated with these cards However, to enjoy those benefits, credit card bill payment within time is crucial.
Paying credit bills on time can boost your CIBIL score significantly. It will reflect that you have the substantial financial stability to repay your debt on time.
Also, paying credit card dues within time reduces the debt-to-income ratio considerably. It is the ratio between your monthly debt payments to your monthly income. Holding a debt-to-income ratio above 40% can create a significant financial burden on you. Additionally, financial institutions will not approve your credit application with a high ratio.
Card issuers usually provide a grace period of 45 days. If you repay your credit card dues within this period, no interest rate will be charged. However, if you fail to do so, a hefty amount of interest rates and a late fine can be imposed on you. It can increase your due amount significantly. Hence, to avoid this, you should consider repaying your credit card bills within time.
Card issuers set a pre-determined credit limit when you avail a credit card. When you make a transaction using your online credit card, the amount gets reduced from your credit limit. Hence, it is vital to pay the bills on time to restore the credit limit and your spending capacity.