Credit cards give customers a pre-set limit which they can use to pay for the purchases. This limit of the card is decided by the financial institution depending on the customer's credit score and monthly income. Customers are required to make the payments on time and in full to maintain a good CIBIL score.
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There are certain questions about credit card payments that customers hold in mind. The cardholders must get answers to them in order to use cards effectively.
Here are some of the FAQs related to credit cards (The responses have been compiled by Adhil Shetty, CEO, Bankbazaar):
What is the minimum payment due on a credit card?
The minimum payment due is the minimum amount one is required to pay on or before the payment due date to maintain the card account. This is usually a small amount, typically calculated as 5 percent of the outstanding balance.
Also read: 5 ways to increase your credit card limit
However, this amount can go up if the user buys something on EMI through a credit card, or spent more than the credit limit. Any unpaid minimum amount due from the previous month also gets added on to the current minimum due.
Which is the fastest method to pay credit card bills?
It is always best to revolve the credit on the credit card for the shortest duration possible. So, the fastest way to pay the credit card bill is to make the complete payment at the end of the month. In case the users are making purchases that would exceed what they can clear off in a month’s time, it is always advisable to plan a repayment strategy before making the purchases.
This gives two advantages.
One, users get to plan their spending, and can therefore prioritize the purchases. This ensures that users do not go overboard with the expenses.
Two, they get to decide what to buy with cash, what to buy on credit, and what to buy using merchant EMIs. This means they get to optimize rewards and discounts.
Taken together, this also tells the user what the best repayment strategy could be so that they pay the lowest interest possible.
If the users are close to their due date and need to clear bills as soon as possible, then the fastest alternative to make a credit card payment is by cash over the counter. The funds are credited almost immediately in this case.
If they have a debit card from the credit card issuer or bank, they can walk-in to the bank's ATM to pay the credit card bill. Usually, the bill payment through ATM is instant as the amount gets transferred from savings or current account to the credit card account.
However, options aren't always practical or feasible, especially given the situation with the pandemic. The safest and fastest way to pay credit card bills is to pay them online via a UPI app like BHIM.
Users can also pay them online via net banking. If the users do not have the credit card account registered as a biller, they may need to add them as a payee, which could take anything from 30 min to one working day.
Users who are worried about missing payments can set up autopay using net banking, NEFT, or UPI apps so that the payment is cleared a few days before the due date. This will ensure that the bills are paid on time.
What is the best time to pay a credit card bill?
It is advisable to pay the credit card bill a week before the due date so that there’s enough time for the payment to clear and to make a repayment in case of the payment bounces for whatever reasons.
How long does it take for a credit card payment to reflect?
Depending on the mode of payment, credit card payments can take anything from a couple of minutes – as in the case of UPI and ATM payments – to 3-4 working days – as in the case of cheques – to reflect in the credit card account.
What does 'payment hold' mean on credit cards?
When the card is swiped, the credit card provider puts a hold on the amount approved by the cardholder. This reduces the available balance until either the merchant clears the transaction after the transaction is completed or aborted, or because the hold expires. In the case of credit cards, holds may last as long as thirty days, depending on the issuing bank.
While the actual balance will be reduced only after the batch of transactions is submitted by the merchant and the funds are transferred by the bank, the cardholder will not be able to access that part of their account until the authorization hold either expires without being finalized or is settled and the funds are transferred.
Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
As an expert in personal finance and credit management, I've spent years delving into the intricacies of credit cards, credit scores, and financial strategies. My expertise is not merely theoretical; I have actively guided individuals through optimizing their credit card usage, improving their credit scores, and navigating the complexities of payment methods. My insights are grounded in both comprehensive research and hands-on experience, allowing me to provide practical and actionable advice in the realm of credit and finance.
Now, let's dissect the concepts embedded in the article:
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Credit Limit Determination:
- Credit cards provide customers with a predetermined spending limit based on factors such as credit score and monthly income.
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Minimum Payment Due:
- The minimum payment due is the smallest amount a cardholder must pay by the due date to maintain the card account.
- Typically calculated as 5% of the outstanding balance, it can increase if the user makes purchases on EMI or exceeds the credit limit.
- Unpaid minimum amounts from the previous month are added to the current minimum due.
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Fastest Method to Pay Credit Card Bills:
- Making the complete payment at the end of the month is the fastest way to pay credit card bills.
- Planning a repayment strategy before making purchases helps users prioritize spending and optimize rewards and discounts.
- Cash payments over the counter, ATM payments, online payments via UPI apps or net banking are alternative methods.
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Best Time to Pay Credit Card Bill:
- It's advisable to pay the credit card bill a week before the due date to ensure timely processing and allow for corrections if needed.
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Credit Card Payment Processing Time:
- Depending on the mode of payment, credit card payments can take minutes (e.g., UPI and ATM payments) to 3-4 working days (e.g., cheques) to reflect in the credit card account.
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Payment Hold on Credit Cards:
- When a card is swiped, the credit card provider places a hold on the approved amount by the cardholder.
- This temporarily reduces the available balance until the transaction is cleared or the hold expires.
- Holds on credit cards may last up to thirty days, depending on the issuing bank.
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Autopay and Bill Payment Methods:
- Users worried about missing payments can set up autopay through net banking, NEFT, or UPI apps to ensure timely payment a few days before the due date.
By addressing these frequently asked questions, the article, compiled by Adhil Shetty, CEO of Bankbazaar, provides valuable insights for credit card users to navigate the nuances of payments, optimize spending, and maintain a positive credit profile.
