A credit card is an extremely convenient instrument for spending money on purchases of goods and services. It gives you the freedom from cash and is an effective medium of improving your cibil score and credit history. Having a credit card is not only a symbol of class but also an efficient replacement of hard cash.
One must have thorough knowledge of how to use a credit card app because if you do not use it wisely, you might end up in a vicious cycle of credit card debt. There are multiple things that you should consider before availing a credit card and also keep in mind some major points while using it to make purchases.
Your failure to pay off your credit card bills on time is one of the major blunders that can happen from your end. Being irregular in repaying your bills of credit card can have adverse consequences on your credit history and financial health. The gruesome after-effects of this can be very severe and have long lasting effects.
Below are some major negative impacts that irregular credit card bill payments can have –
1) Late fee – This is the most common consequence that you will have to bear if you are late in paying off your credit card bills. Any issuer of credit card charges a defined amount of fee for being late in paying your bill. A user usually gets a grace period of 45 days to pay off the the credit card bill free of any extra charges. Late fee is charged if the user fails to do so within the grace period.
2) Negative impact on credit score – Your credit score is a very important factor which is considered seriously before lending your any loan. It is a sign of your good financial health and is equivalent to a valuable asset one can own. Being late or irregular in paying your credit card bills can have negative impact your credit score and hence cause financial problems for you.
3) Losing perks – Every credit card comes with certain perks and benefits along with it. Irregular repayment from your side can make you a delinquent customer and it may make you lose your eligibility for all the benefits and perks that you have been offered; interest-free grace period being one of them.
4) No pre-approved offers – As your credit history takes a big hit because of late payments, your defaults are visible to all financial institutions which instantly make ineligible for the pre-approved offers for you at their end. You lose your credibility and your financial health is greatly impacted because of this.
Thus it is very important to regularly pay off your credit card bills so that you do not have to face the negative impacts as listed above.
