Welcome to “Financial Behaviours: Can You Spot It?”!
Today, let’s analyse different credit card usage behaviours. Meet our subjects today, Mr. X and Ms. Y. Despite receiving their credit cards roughly around the same time, they have contrasting opinions about them. Mr. X believes credit cards put you in debt, but on the other hand, Ms. Y says they’re a lifesaver!
Let’s review their credit usage behaviour:
Mr. X is a tech-enthusiast, often purchasing the latest home improvement gadgets or audio devices and systems on a whim. However, he fuels his impulsive shopping sprees with his credit card. Regardless, he usually only makes partial payments barely before the due date. The remaining debt is carried forward to the next month, and it begins accruing interest from the beginning of the next billing cycle.
Ms. Y is a connoisseur of delectable cuisines. She frequently visits local cafes and restaurants to explore the ambience and delicacies. To cater to her taste buds, she uses a credit card with dining benefits and additional rewards. Furthermore, she pays her credit debt in full before the due date. Since she has no pending dues, the next billing cycle will remain interest-free.
If you couldn’t spot the problem, here’s the answer – Mr. X practices poor credit usage habits by only partially paying back his outstanding dues.
Unlike him, Ms. Y responsibly pays all her dues promptly to avoid accruing any interest on the credit used. Due to this difference, they each have different opinions on credit cards and their benefits. You, too, could be like Ms. Y! Just read on and find out how.
Also Read: Things You Should Not Do With a Credit Card
Most credit card companies offer customers a grace period from when the statement is sent over until the billing date. During this period, you won’t incur any interest on purchases made using the credit card. Although, your grace period is only interest-free if you have been making timely repayment of dues.
Most credit card companies offer customers a grace period from when the statement is sent over until the billing date.
This option is only for credit card users like Ms. Y, who pay their dues on time. If you have pending bills from the previous billing cycle like Mr. X, you will incur interest on them and the purchases made after that.
While dealing with credit cards, it’s crucial to maintain healthy repayment habits. To stay within the boundaries of positive credit behaviour follow these dates related to grace periods.
Note: Once the grace period has passed without any payments, you will be liable to pay heavy interest.
An interest-free grace period could bail you out during an end of the month budget crisis. Just bear these points in mind while dealing with credit card grace periods.
Once you consistently begin paying off all your credit card dues, banks will start offering you the benefits of interest-free periods in no time!