Nowadays, the condition is that, the credit cards are present in almost all wallets. Everyone is going cashless while going for shopping, dining, traveling and for more. In the financial market, credit card is one of the handy financial products that are available as the payment tool.
Credit card comes as a boon or curse for you, depends on the way you used it. So, never deny the fact that no other financial tools are as fast as a credit card, when it comes to a financial urgency. But at the same credit card can turn into a debt trap when it is not used well.
There are so many reasons to paying off your outstanding credit card bills on time which are mentioned below, take a look-
• Helps in boosting CIBIL – Paying credit dues before the time limit comes as an effective way to boost your credit or CIBIL score. As, an early payment shows or reflects well in your financial status and hence brings a positive impact to your Credit score also. For instance, if your CIBIL is low and you want to improve it then there is no better and easy way other than paying the dues on time.
• Helps in making budget- The key thing to manage your personal finance is none other than the budget, the way you are setting your monthly budget. When you make your credit card bills payment early, you will have an idea or know that how much amount left in your pocket. Knowing the exact amount that you have in your pocket will help you in planning accordingly for the rest of the day of the month.
• Avoid interest charges- When you miss or delay in paying your credit card bills then both the interest rate and late fine starts accumulate. So, it is better to pay off all your bills on time. One can avail the convenience as most of the credit card providers don’t charge interest or any late fee if the due is paid within the due date. But it’s not that you don’t pay your bills on time.
• Lower your Debt to income ratio- The income-to-debt-ratio is the ratio of your monthly net income and the debt you owe. And, the ideal debt-to-income-ratio is less than 40%. In case, if your debt-to-income ratio is more than that, than you won’t be able to avail a credit even in emergencies. When you pay off your credit bills before time, your debt to income ratio lowers.