Market research implies that transactions involving credit cards witnessed a 30% rise to Rs.6 lakh crore in 2018-19, up from Rs.4.6 lakh crore in 2017-18. Credit cards have become the go-to financial tool for several Indians who engage in frequent online and offline purchases. From funding emergency medical expenses to high-worth buys, these cards serve as a multi-purpose instrument. Additionally,
However, a large section of individuals looks for ways to steer clear of paying hefty credit card interest to preserve a significant portion of their finances. Therefore, the following boils down to a few pointers that a credit card user can leverage to reduce the related interest rate.
Effective ways to lower credit card interest
Individuals should consider the following methods to ultimately help themselves reduce the rate of interest on credit card transactions –
1. Clear outstanding balance –
Individuals often have to pay a hefty sum as interest on a credit card in case they fail to clear their outstanding balance within the billing period. On that note, the purchases paid for within the billing cycle do not carry any interest. In the case that a user delays credit card bill payment, he/she has to pay the applicable rate of interest.
Therefore, individuals should repay their credit card debt within the billing cycle or grace period combined. It enables us to benefit from interest-free purchases, both for low- and high-ticket purchases.
2. Avail balance transfer facility –
A balance transfer facility typically refers to an alternative strategy to reduce one’s credit card interest. Within this process, an individual has the option to shift his/her unpaid balance from a high interest-charging card to a lower one. In this case, the new issuer accepts the existing credit card account from another.
As a result, individuals get the option to repay the same amount of credit card dues, only under an affordable interest rate regime.
It should be noted that low or zero interest rates on balance transfer credit cards are only available for a promotional period, which can go up to 6 months.
3. Choose the appropriate financial institution –
Providing credit cards forms a part of a highly competitive market in the Indian economic scenario. As a result, lending agencies rely on extending particular benefits and features to attract an increasing volume of credit card users. These typically include an affordable credit card interest rate, along with designated lifestyle cards for maximum financial convenience.
Therefore, individuals should compare among the lending agencies to point one out that provides a competitive rate of interest on credit cards. Besides, this method will help individuals scour through the separate benefits of each credit card and choose one that suits their expense pattern the most.
4. Avoid cash withdrawal from ATMs –
Withdrawing cash from an ATM will instantly attract a high interest along with a cash advance fee. There is no grace period in such transactions.
However, with the increase in the variety of credit card offers, certain products extend interest-free cash withdrawal. One such card is the Bajaj Finserv RBL Bank SuperCard. Cardholders do not have to pay any interest when withdrawing cash from an ATM for up to 50 days.
Additionally, this NBFC also extends pre-approved offers that allow customers to reduce the time required for approval significantly. Such offers apply to numerous financial products such as credit cards, personal loans, and business loans, among others. You can also take a look at your pre-approved offer just by providing your name and necessary contact details.
Also, individuals should choose the right lifestyle card as per their spending habits to avoid the accrual of credit card interest. There are several easy how individuals can use a credit card wisely. For instance, one can even convert particular high-worth purchases into convenient EMIs for eventual financial relief.