Credit Card Excess Charge

#1
I am using SBI Credit card and I have purchased for Rs 11000 since Jan 2018 using the card and monthly I used to pay the minimum balance. Now I found that I have paid rs 16000 since jan 2018 and usage Charges itself is Rs 11900. Now Rs 30k is outstanding. Am I wrongly used the card? Now what is the way forward? I have to close the outstanding in one go?? Please suggest.
 
#2
I am using SBI Credit card and I have purchased for Rs 11000 since Jan 2018 using the card and monthly I used to pay the minimum balance. Now I found that I have paid rs 16000 since jan 2018 and usage Charges itself is Rs 11900. Now Rs 30k is outstanding. Am I wrongly used the card? Now what is the way forward? I have to close the outstanding in one go?? Please suggest.
Paying the minimum payment amount only is a grave mistake. That is not the way we should use it. In case of non-complete payment of bill, like what you have done, the remaining outstanding balance that is unpaid as well as every subsequent purchase incurs high interest as specified by the bank (~ 36% pa).

I believe you are not aware completely of the way credit card works.

Please pay your complete outstanding as soon as you can.

Some tips for credit card usage:

1. Always settle your credit card bills in full else you could very soon see the outstanding balance snowballing. Compounding works both ways.
2. Keep a watch for the bill pay by date. Ensure you pay the bill at least 2 days in advance of this date to avoid any surprises.
3. You eventually need to pay up for every bit of credit card usage. Point 2 ensures there is no late fee or interest.
4. Make the credit card work for you - look out for cashbacks/reward points/miles. Remember this is additional benefit. Primary motive would be to still use the card judiciously.
 

Alchemist

Administrator
Staff member
#3
I am using SBI Credit card and I have purchased for Rs 11000 since Jan 2018 using the card and monthly I used to pay the minimum balance. Now I found that I have paid rs 16000 since jan 2018 and usage Charges itself is Rs 11900. Now Rs 30k is outstanding. Am I wrongly used the card? Now what is the way forward? I have to close the outstanding in one go?? Please suggest.
You should have paid the entire amount by due date.

As stated by stk_chk, whenever you pay only the minimum amount, you have to pay high interest on the remaining balance.

Now, I suggest you pay the entire amount at the earliest. Credit card debt is high interest debt and taking high interest debt will hurt your credit score.

(The impact on the credit score is positive when the payments are made on or before due date and no interest is charged).
 

Atiker

Active member
#5
Thanks for response. I have closed all the outstanding dues. Please suggest how I can use credit card fruitfully.
Get two credit cards.

1. One with a very low limit which you can use on a daily basis in physical point of sale e.g. shops, mall etc.

For this icici is good, as they are thrifty in giving credit limit. Try to get a life time free credit card. Or you can ask whichever bank you have savings or salary account. Don't go beyond 5 digits for credit limit on this card.

2. Another with as much high a limit as possible. Lock it in a safe place at home. Most importantly don't carry daily in wallet. You can use it for online buying at safe sites, or when you have planned for a big ticket purchase.

Why high limit ? So that you can use it during emergency situation e.g. for emergency hospitalization, emergency situation in abroad trip, swipe at hotel in foreign country for credit authorization, online big payment say for college fees or emigration payment etc.

Citibank usually gives a very high credit limit. Haven't encountered a situation where it was declined. I have opted for citibank rewards card which is free for first year and depending on usage, i thinks its 35k pa the next years charges are waived. Best part is that the points earned can be used to buy amazon gift card. I shop a lot on amazon :)

Most Important - Always pay as soon as the bill is generated. Opt for online bill via email. Set up a monthly reminder calendar entry in say google calendar

If you apply using this link I will get referral ;)

https://www.online.citibank.co.in/p...reditcards3&referralCode=HeAB320C&Section=MGM

Whatever you decide don't get a card which has non waived fixed annual charges unless you know that you will earn much more points/money using that card than the fees charged.
 
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