Why You Should Pay the Entire Balance of Your Credit Card Bill Each Month

You may use your credit card for varied purposes, from paying your utility bills to regular shopping online or offline. Using a credit card is like taking a short-term loan, which you have to repay at the end of your credit card billing cycle with your credit card bill. If your credit card bill is more than you can afford, you can pay a part of it now and the balance later, along with the interest charge. However, paying the credit card bill in full each month brings many benefits and saves you from a lot of troubles. 

Clearing your credit card balance at the end of each billing cycle shows lenders that you can responsibly handle your credit. It also minimises your credit card costs to help debt management. Let us see why you should make your online credit card payment in full each month.

No Interest Charges

Although credit card companies do not make it mandatory to pay the credit card bill in full each month, they levy interest charges on the balance amount you carry over to the next billing cycle. This means you have to pay interest on the unpaid amount you owe. It may quickly add up and make a hefty charge. However, if you make your online credit card payment in full each month, you won’t need to pay any interest charges. 

Some credit cards come with an interest-free period for the first few months, but you must remember that the 0% interest charge is only applicable for a limited period. After that, interest will apply to your balance amount.

Easier Financial Management

You should avoid making minimum payments as far as possible, even if it seems affordable for the time being. These repayments can quickly build-up, and you may take decades to pay them off. The interest will keep accumulating, and you get caught in a never-ending debt trap. Paying off your credit card bill in full each month makes your finances more straightforward. Besides that, remember to borrow only what you can afford while keeping your credit utilisation ratio low. If you find it challenging to clear an entire bill, pay as much as possible and make a budget to clear it quickly.

Increased Credit Limit

You show your credit card issuer that you are a responsible borrower by making your online credit card payment in full each month. If you have been paying your entire credit card bill amount each month, you improve your chance when you request an increase in your credit limit. Increased credit limit makes more credit available in hands. It also allows you to reduce your credit utilisation ratio without lowering your expenses. 

Some credit card companies voluntarily offer credit limit increase to cardholders with a strong repayment history. However, don’t be tempted to increase your expenses with your credit limit. If you do that, you won’t benefit from it and only make bill payments more difficult to clear.

Improved Credit Score

Paying your credit card bills in total for each credit card billing cycle and maintaining a low credit utilisation ratio will project you as a responsible borrower in front of the credit card companies. Remember, a good repayment history is one of the biggest influencers affecting your credit score. Lenders largely depend on your credit score to determine your creditworthiness. A strong repayment history helps you achieve a high credit score, which eventually makes loans easily available to you. Lenders will readily accept your loan application with lower interest rates and favourable terms and conditions when you apply for a loan.

Grace Period

When you start your new billing cycle with zero balance, you get a grace period to make further purchases. This grace period maybe 21-25 days, giving you enough time to clear your new balance before the credit card company charges any interest or fees. However, remember, the grace period applies to new purchases only. You will need to pay charges on other transactions types like cash advances.

Ideally, it would help to make your online credit card payment in full each month. Although credit cards give you the flexibility of part payments, total payments each time will improve your credit score and keep you away from debt. Make a budget and avoid overspending to keep your monthly bills under control, and pay them in full each month to gain maximum benefits.

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