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5 Reasons why you must not miss your credit card payments
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Having a credit card is a great boon because it saves you the hassle of carrying too much cash and can help you with spur-of-the-moment purchases. However, making your monthly credit card payments on time is a ‘must-fulfill’ obligation that goes hand in hand with owning a credit card. Your CIBIL score depends on these payments, so whether you make these payments on time definitely affects your financial standing. Having to pay for your expenses through your credit card is a smart thing to do.
The responsibility of making payments on time
The famous quote goes – with great power comes great responsibility. No benefit comes without accountability. While it feels great to simply swipe and pay for things that you want, you need to be diligent about paying for your purchases on or before your payment’s due date. If you do not do so, you may face some serious repercussions.
Getting a card is easy, but keeping track of payments is hard. Even so, this is not a task that you can overlook.
To clarify things even further, here are FIVE strong reasons why you should not miss your credit card payments, ever!
1. You want to avoid paying late fees
There are two reasons why a person would not fulfill credit-card payment obligations: one, forgetfulness, and two, lack of money. However, this is far from ideal. You can overcome both problems by pre-planning payments and setting up enough reminders for yourself. That way, you can avoid paying late fees, which can become quite an additional financial burden.
2. A late payment means a certain hike in the interest rate that you shell out
You need to watch your credit-card payments carefully. When you do not pay on time, you are charged a late-payment fee. However, it does not end there. Late payment fees mean an almost certain hike in the interest rates that you pay. Your future spending could start getting more expensive.
3. If you default, your free credit period advantage can be withdrawn
A credit card brings with it the privilege and pleasure of having a credit limit, which gives you a lot of freedom for making big purchases. However, if you default on your credit card payments, your credit limits are bound to start shrinking. With lower credit limits, you will have to curb your future purchases.
4. Your CIBIL score will be affected adversely
Default on your payments can stain your credit score permanently. This is why you need to steer clear of this pitfall. Having a bad credit report has many disadvantages – you will no longer be automatically cleared for loans or for availing of new credit cards. Even if you are offered additional credit cards, they will be at obscenely high unattractive interest rates.
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5. You can avoid an indisputably unpleasant tryst with loan recovery agents
If your credit card payments are due for over 90 days, specific procedures begin to be rolled out. Eventually, your matter is forwarded to recovery agents or a bank's own recovery section. Debt collection agencies are notorious about their zeal in recovering the bank's money – and being at the receiving end of their persistence is not a pleasant experience.
So, the next time you are trying to figure out how to get a credit card, it would be worth it to pay close attention to the monthly payments details as well. It is amply clear that there are serious consequences to not making your credit card payments on time.
Disclaimer: Copyright Kotak Mahindra Bank Ltd.
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