Credit Card Payment 101
One must fully understand how monthly billing works before they make a credit card payment. If this is your first time to own a credit card, read on as these terms will be helpful.
Statement date. This date is basically the bill?s print date.
Payment due date. This would be the date when the cardholder must settle at least the minimum payment. Although late payments would be duly credited to the account, a late penalty fee would be assessed because of this.
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. No interest or finance charges would be assessed if the cardholder makes payment and it clears on or before the payment due date.
Minimum Amount Due. This is a nominal amount in comparison to the total amount due ? see above. If in any event you are not able to make full payment, the credit card company would require you to pay no less than this amount to remain in good standing and avoid ruining your credit.
Interest charge. Credit card holders are levied finance charges for what is, technically, borrowing money from the financial institution if in any event they cannot satisfy the total amount due. There are two main things that determine this rate ? outstanding balance and interest rate.
Late charges. Regardless whether payment clears one day or ten days after the payment due date, late fees are assessed on the cardholder?s bill. Avoid this as much as possible as this is almost 2X the interest rate of the finance charge. If you begin missing payments regularly, you risk jeopardizing your credit rating and having your card canceled.
Having understood the information on your monthly bill, here are simple strategies for paying your credit card charges.
Make the full payment due at all times. Paying only the minimum amount due means being charged for a high interest rate on the unpaid amount.
Paying above the minimum payment due, as high above as you could, would be the play you want to run if you are stymied by an unexpectedly high total amount due. You want to strategically cut your losses by reducing the finance charges, and you can do this by employing the above tactic.
One other thing you can do to pick apart the scrum of finance charges that might crush your chances of having a reasonable bill would be to make a partial payment once you get the bill. 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.
Reward points are a special perk offered on some cards for their most loyal and reliable cardholders. Reward points can either be credited as payment (which is preferable), as cash back or to take advantage of retail store discounts.
Lastly, pay the total amount due. In case you missed it the first time.
A credit card bill can be settled in a number of ways. There?s the traditional way of waiting in line, or the faster way of paying electronically through your computer, cash machine or mobile phone. Perhaps the only excuse to miss your payment due date given all these options is premature senility.
Therefore, settle smart: pay the total, pay on time.
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Source: http://financehelpnews.com/business-finance/credit-card-payment-101
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