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Settle Smart: How To Do Credit Card Payment

Aug 17, 2007
The first step in doing a credit card payment is to understand your monthly billing. The following are terms you will encounter:

Statement date - The date that the bill was printed.

Payment due date - this is the day that the cardholder must pay any outstanding balance. Payments made after the said date will be credited, but will also be fined a lateness fee.

Total Amount Due - It consist of the unpaid amount from the previous month, as well as purchases, payments and interest charges for the current month. When the cardholder pays this amount on or before the payment due date, no interest charges will be imposed.

Minimum Amount Due - this is a smaller fraction of the total amount due. To maintain a good standing with the card company, pay at least this amount, if you cannot afford to pay the total amount due.

Finance charge - if the cardholder is not able to pay the total amount due, then he is charged a fee for borrowing money from the company. It is calculated based on the interest rate of the card.

Late charges - Paying or not, after the payment due date, is penalized with late charges. Avoid this as much as possible as this is almost 2X the interest rate of the finance charge. Consistently missing payment may lead to cancellation of the card and a bad credit standing.

Having understood the information on your monthly bill, here are simple strategies for paying your credit card charges:

Always pay the total amount due. Paying only the minimum amount due means being charged for a high interest rate on the unpaid amount.

If you cannot pay the total amount due, pay as much as you can above the minimum amount due. This strategy aims to reduce the finance charges that you have to pay for settling partially.

Do partial payments as early as possible (as soon as you receive the billing). Finance charges are based on the unsettled amount and the time it remains unsettled, so the shorter it is, the lower it will be for finance charges.

Some card companies reward loyal cardholders by accumulating points for their spending. Check if reward points can be credited back as payment.

Lastly, pay the total amount due. Just to emphasize the point!

There are many avenues to pay your card bill. There's the traditional way of waiting in line, or the faster way of paying electronically through your computer, cash machine or mobile phone. With all these conveniences at hand, it is quite unforgivable to miss your payment due date.

Therefore, settle smart: pay the total, pay on time.
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