As a credit card user, there may be times when you forget to pay your credit card bill on time. However, if you do, there could be many consequences. Therefore, one of the biggest responsibilities of a cardholder is paying their bills on time.

Find out the reasons why you should pay your bills on time:

Interest rate

The interest rate on a credit cardalso known as finance charges, are levied by credit card issuers on the outstanding balance. It applies to card users who do not pay their credit card dues in full. This interest rate will increase if you do not pay the minimum amount by the due date. It will also be applicable to cash withdrawals and expenses made by card after the expiry date.

Late fees

Late fees are charges levied on credit card users who are unable to pay their bills on time. Issuers charge this fee on the next credit card bill. According to the Reserve Bank of India (RBI), late fees are charged on the unpaid amount rather than the full amount. Additionally, the central bank clarifies that late fees will be charged if payment of the bill is made three days after the due date.

Minimum amount due

Some credit card users feel like they’re paying the price minimum The amount owed will not incur any interest charges on the unpaid invoice amount. However, you will have to pay interest on the unpaid amount from the payment due date. It is therefore advisable to pay your credit card bill in full before the due date.

End of interest-free credit period

By not paying your credit card dues In time, issuers can remove the interest-free credit period from your card. It is the period between the transaction date and the payment date. The interest-free credit period can vary between 20 and 50 days. This adds an advantage to your credit card because issuers bear the interest on your card until the maturity date.

Impact on credit score

A credit score is an important element that determines your creditworthiness. Paying your credit card bills is an important part of your credit score. Therefore, failure to pay credit card dues can negatively impact your credit score, which could affect your chances of getting a loan or credit in the future.

Effect on credit limit

If you often fail to pay your credit card dues on time, issuers may even reduce the credit limit on your card. This will limit your spending ability for future transactions on your card. In some other cases too, such as frequently exceeding the credit limit, lower credit score, etc., may lead the issuers to reduce the credit limit of your card.

In conclusion, as a credit card user, you must be responsible for paying your bills on time to avoid additional charges on the card. Aside from additional expenses, missing payments also have a bad impact on your ability to manage your finances.

(Note: Using a credit card carries its own set of risks)