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Read this article further to how can you make the most of the interest-free period in credit cards?
Interest is the rate associated with borrowing money via your credit card account and is also referred to as an annual percentage rate (APR). The purchase interest cost is commonly advertised by banks or credit card lenders, and refers to the rate levied on purchases made with a card if an interest-free period doesn’t apply.
The no-interest period basically refers to the time-period between a purchase made by the cardholder on a credit card and its payment due date. This no-interest period is given to you as long as you clear the outstanding amount by the due date of payment. If you do not pay off the outstanding amount then you will have to pay finance charges that are also known as credit card interest rate.
Your interest-free period is generally 30 days, the total number of days in your statement period. Also, the additional no-interest period until your due date of payment is 14 or 25 days, depending on the card you opt for. Meaning that, your credit card has a no-interest period on purchases of up to 44 or 55 days.
Below-mentioned is some of the best ways to make the most of interest-free period in credit cards:
If the last day of your billing cycle is near then you should spend in a way that you can avail a longer no-interest period.
For instance, in the case that is mentioned above, if you want to buy something on 20th June, you can postpone that purchase to 24th June so that it falls on the first day of your next credit card billing cycle. With this, you can make the payment for this purchase on 10th August instead of 10th July.
By just postponing the purchase by 4 days, you have saved yourself from paying AED 4000 on your bill during the July month. Just imagine if the outstanding dues on your credit card in the month of July are already AED 20,000, and your monthly income is AED 40,000. An extra spend of AED 4,000 during the current billing cycle would have left an additional burden on your monthly budget.
If you own two credit cards with different due dates then you should spread your expenditures across them. You should utilize those cards in such a way to make sure that all the purchases are made at the starting of their respective due dates. This will ultimately help you to avail a longer interest-free period.
For instance, just imagine that you own two different credit cards named “Card A” and “Card B” with due dates of 1st and 15th of every month respectively. For credit card transactions occurring between the dates 1st and 15th, you should use Card A and for purchases between 16th and 31st, you should use Card B. Doing this will help you to avail a longer interest-free period for all credit card transactions. Nonetheless, just keep in your mind that owning too many credit cards may take a toll on your credit score. Plus, be sure you keep the track of multiple billing dates and due dates so as to avoid late payment charges and finance charges.
|Credit Card Interest-Free Periods - How Do They Work?|
Following are some scenarios when you can’t avail an interest-free period:
|Credit Card Billing Cycle in UAE|
Credit cards are indeed an amazing financial tool which when used responsibly can prove to very advantageous. This is mainly true when it comes to the no-interest period that enables you to spread your expenses over several days.