In principle, when you make a transaction using your debit card, money is automatically transferred from your Bank Account to the merchant. Credit cards work a bit differently. When you make a purchase, the bank provider pays for you with the expectation that you’ll repay them within a certain time span – and they don’t charge you an interest unless you fail to pay back on time.
So what am I implying at ?
Well, it generally takes 2-5 business days for transactions to post on-to your account and are then debt that the bank ( credit card issue) holds in your name. My advice – pay it off immediately. Don’t keep a balance. This means you’re paying off your transactions worth within 2-4 days of making it.
Why am I recommending this?
I say this because of two reason.
- You can ensure you pay for what you purchased and know how much you have left after paying off the debt.
- You can monitor is there were any fraudulent transactions.
Holding off until the last moment to pay off your card can land you in a tough spot as you will not necessarily remember every exact transaction you made. Also, if you keep piling up the bill, there is a high probability you have o repay more than you actually hold in the bank (checking/saving account).
Additionally incase you miss a payment, you won’t be affected as significantly and if it’s a small amount, you can generally request a new payment date with your credit card provider and they’ll check your records. If you’ve been paying off your debt on time consistently, they’re more likely to let you off the hook.
However, keeping consistent balances or high spends but making minimum payments will not guarantee you that luxury.
So, spend wisely on your credit card as you would using a debit card – reaping those amazing cash back/ rewards offers along the way!
Interest rates on failing to meet all payment requirements on credit cards are ridiculously high (16-35% variable).
If you had $500 and paid $499 but missed the $1 and defaulted, then you could be liable to pay an interest on the whole amount. So please, be mindful of your spending and balances.