Credit card are a convenient payment tool, but if used improperly, they can result in high interest and fees. Credit card interest rates are usually high, especially when bills are not paid in full and on time. Therefore, it is very important for every cardholder to understand how to use credit card correctly to avoid falling into the trap of high interest rates.
The most direct way to avoid high interest is to make sure you pay your credit card bill in full and on time every month. Credit card interest is usually calculated based on a daily rate, and if you fail to pay it back in full before the due date, the outstanding balance will incur high interest, which will continue to be charged to your bill next month.
Understanding the risks of minimum payments
Although credit card allow you to pay only the minimum payment, doing so will result in high interest charges on the outstanding balance and will extend the time it takes to pay it back. The minimum payment is usually only a small portion of your debt, with the remainder continuing to accrue interest at a high rate.
Avoid minimum payments: If you can only make the minimum payment, interest will accumulate quickly and your debt will be difficult to pay off. to pay than the minimum payment.
Make a repayment plan: If you can’t pay the full amount for the time being, to make a realistic repayment plan to pay off your debt as quickly as possible and reduce interest expenses.
Although the overdraft limit on a credit card is usually high, it does not mean that you should use it lightly. Excessive overdrafts will not only increase financial pressure, but may also lead to high interest charges. Especially if you have a large amount of outstanding balance on your credit card bill, overdrafting will make your financial situation difficult.
Many credit card installment payment services, which can spread large purchases over several months or longer. However, this service usually charges additional fees or interest, so you need to be particularly careful when choosing installment payment.