How to use interest-free period in credit cards smartly?

Credit cards are simply incredible. You need not carry wads of currency notes while going for shopping as credit card is enough to pay all your bills. In case of emergency, credit cards can provide you funds instantly. Moreover, it can be used for online shopping and transactions without any hassles.

If you want to take maximum benefits of your credit card at minimum charges, all you need to do is to use it smartly.

Credit cards have interest-free period of 50 to 55 days. Here is how to make best use of this duration:

Interest-free period

The duration of interest-free credit is the total of two periods – the monthly statement cycle (30 days) and the time given for payment from the last day of statement period (usually 20 days). Thus, the interest-free period comes to 50 days (30+20).

The number of interest-free days depends on when you are making the purchases. If you are making purchases on the 15^th day of your statement cycle, then you will have only 35 (15+20) days to make your payments.

Time it smartly

Interest rates are high and loans are costly. So what is the way out? You card provides you interest-free credit for a period of 50 days.

The billing cycle of credit cards is of one month and customers are given 20-25 days extra to pay the outstanding. You would be charged nothing if you pay the outstanding amount by due date.

The keyword here is ‘timing’. You should make your purchases when your billing cycle begins so that the charges appear in the next month’s bill. This will give you a time of 50 days to settle the dues.

Juggling works

You can make optimum use of interest-free credit if you have two or three credit cards. But make sure that all your credit cards have different billing cycles. You can also get your billing cycle changed to maximize benefits.

However, you must be very careful while making payments, more so if there are a number of cards in your wallet. Keep track of billing cycles and due dates.

Minimum payment, maximum loss

You can take the benefit of interest-free period only if you are paying your outstanding in full within the time limit. If you decide to pay the minimum bill, you will be charged an additional 2-3% on the outstanding amount. Moreover, if your billing cycle is starting with an outstanding amount you will not get interest-free credit on a new transaction.

Track your payments

You have dropped the cheque a day or two before the due date and you think you can breathe easy now. Well, think again! Your payment will be considered only when the amount has been actually credited in the company’s account. Drop your cheque well in advance to avoid the risk of late charges and other penalties.