4 Things You Didn’t Know About Credit Card Interest Rates

Business

In the last few years, credit cards have gained popularity as viable modes for daily financial transactions. Credit cards proffer users short-term credits that allow them to spend whenever they require and repay it later. 

Therefore, like any other credit, it accrues interest on the outstanding amount. However, credit card interest rates are not levied from the date of the transaction. It is charged after a grace period of 45-50 days if the bill has not been settled in full.

C:\Users\Arjun\Downloads\credit card.jpg

Moreover, the interest charged on credit cards is not universal; it varies from one financial institution to another. Following are the top five things that you should know about credit card interest rates.

Things to remember about credit card interest rate

  1. Credit card interest rates are levied after the completion of the grace period if you pay anything less than the total due amount. Therefore, in case you fail to repay the entire outstanding within the given period, your credit card issuer will begin accruing interest based on your total due amount. Additionally, interest is also levied on the credit card outstanding amount if you only pay the minimum amount due.
  2. If you withdraw cash from ATMs by using your credit card, it will also attract interest on that particular amount. Typically, this interest is charged from the day you avail of this facility. However, some credit card issuers offer an extended interest-free period on ATM cash withdrawals via their credit cards.
  3. The interest rate charged on credit card outstanding is an annual rate (APR). However, every month financial institutions charge interest according to the MPR, i.e. the monthly rate. This interest is accrued and carried forward to the next billing cycle until the cardholder repays the entire amount. Moreover, MPR differs from the APR. If APR is 24% for the entire year, then MRP is 2%.
  4. Lastly, you can reduce the interest rate by improving your credit score. Since your credit score reflects your credibility as a borrower, a higher credit score reduces the risk of lending for financial institutions. Thus, by improving your credit score, you can reduce the credit card interest rates.

What is the grace period in a credit card billing cycle?

The grace period in a credit card billing cycle represents the interest-free period for repayment. Typically, it is 45-50 days from the issuance for the card statement for every card. Hence, if you repay your credit card debts within this period, you will not be liable to pay any interest. For instance, if your credit card bill comes on the 10th of every month, then your interest-free period will be from the 10th of the month to 25th or 30th of the next month.

Interest accrual is, thus, not a deterring factor for using credit cards, if you settle your dues on time. You can, thus, easily proceed on to apply for a credit card, without having to worry about incurring additional expenses by way of interest payment.

How to apply for a credit card?

You can apply for a credit card online without any hassle. At first, you will need to visit the website of your preferred credit card issuer and then check the required eligibility criteria. If you successfully fulfil these parameters, then you can apply for a credit card via that website.

After filling out the required information for the credit card application, you will need to submit the required documents to complete this process. You can upload these documents online via that same website, or you can submit them manually to a representative of the company.

Once this entire process is successfully complete and your application approved, you will receive your credit card.

Credit cards nowadays offer several benefits, and if you are looking for a feature-loaded card, then you can opt for Bajaj Finserv RBL Bank SuperCard. This payment card offers 50 days interest-free ATM cash withdrawal, emergency loan against the unused credits, and attractive reward points.

Furthermore, the NBFC also provides pre-approved offers against its credit card applications. Such offers aim to make this application process smooth and less time-consuming. Moreover, they are also applicable for other financial products like business loans, personal loans, etc. You can check your pre-approved offer by providing your essential contact details.

It can, thus, be concluded that credit card interest rates are affected by several factors, as discussed above. Therefore, these factors are among the most important things to know before applying for a credit card. Apart from interest rates, it is also crucial to take note of other charges accompanying a credit card to make sound financial decisions.

James Joes

Mini Business News is a blog where we provide lots of business tips and other social statements. Articles that benefit the whole world

https://minibusinessnews.com

Leave a Reply

Your email address will not be published. Required fields are marked *