Many times you pay with a credit card but it fails or fails. You must be wondering what difference will it make. but it’s not like that. Failing credit card payment can be harmful for you. Your CIBIL score may be affected. There is no doubt that payment may fail due to mistake or inability to pay, but banks see it in negative sense.
Impact on your finance and cibil score
Always remember that interest on your missing payments (including late payment fees) is compounded daily. Monthly interest rates on credit cards can be up to 3-4% per month at the outstanding amount (principal, interest and late fee). According to CIBIL, even if you feel that you have missed your payment for one day or a week, your interest liability may be more than your estimate. Only by paying the minimum amount payable or not paying for a few months will increase your payable amount significantly.
You can understand what is the effect
Suppose you pay only the minimum amount payable for 6 months. Suppose on May 1, you buy Rs 1,000 from your credit card, which has an interest rate of 3% per month. Then you choose to pay only the minimum payable amount (5%of the outstanding amount at the end of the month) for the next 6 months and do not spend any extra money on that credit card. While paying your balance amount at the end of 6 months (December), you will have to pay Rs 1,560. This is 56% higher than the principal amount spent.
Even without making any other purchases on the card, choosing a minimum payment option will increase your repayment period to about 9 years. If you decide not to pay the minimum amount, not only you will be the debtor and your CIBIL score will be affected, but you will have to pay more than double the amount spent.
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