How to Avoid Paying Interest on HDFC Credit Card?
April 10, 2019
All credit cards that are available are a type of loan that customers can get on purchases made for a limited period. Just like any other loan, credit card advance also charges an interest. However, unlike loans where the interest is completely unavoidable, it is possible for individuals to avoid paying interest on Credit Cards.
There are different types of interests charged on Credit Cards that one must understand in order to avoid overpaying. With HDFC Credit Cards, you can choose and follow a few financial habits to avoid these charges.
What are the Different Types of Interest levied on Credit Cards?
The interest charged on your Credit Cards is called Annual Percentage Rate. Although the APR refers to the interest rates that are charged through the year, the interest that is displayed in the bill or statement each month is the Monthly Interest Rate. With HDFC Bank, the interest rate can go up to 3.4% per month. These rates are negotiable and depend upon the relationship of the Credit Cardholder with the bank. The different types of interest rates charged on credit cards are as follows:
- Purchase APR: This is the rate of interest that is charged on regular purchases that are made on the Credit Card. This type of interest is also called the regular APR.
- Cash Advance APR: When customers use the Credit Card to withdraw cash, interest is charged on the amount that is withdrawn. This is charged immediately and does not allow any grace period on the transaction. HDFC usually charges 2.5% of the cash withdrawn or Rs.500, whichever amount is higher.
- Balance Transfer APR: This is the APR charged on any balance that is transferred from an HDFC Credit Card or to an HDFC Credit Card. These charges could be the same as the Regular APR or could be lower than the regular APR charged on the card. There are added processing charges on balance transfers. With HDFC, the processing charges on balance transfers are usually 1% of the balance that is transferred.
- Introductory APR: The introductory APR differs depending upon the card. Usually, the interest rate charged for this period is 0% as the Credit Cards offer an interest-free period for a limited period after availing the card. Some cards may also offer other deals and offers during this period.
How To Avoid Interest Rates on HDFC Cards?
The good news is that it is possible to avoid some of these charges on your HDFC Card. Here are some options that customers can choose to keep the repayments as low as possible.
- Make the Most of The Interest-Free Period:
Each time the HDFC Credit Card statement arrives, there are two dates that are mentioned on it. One is called the statement date, and the other is called the due date. The statement date is that day when HDFC Bank generates the statement containing the expenses of the previous month. The due date is when the customer is required to pay the amount that is seen on the statement. Usually, the due date is between 20 and 25 days away from the statement date. This period is known as the grace period which gives customers some leverage to repay the outstanding amount on loan.
For instance, if the statement date mentioned is 1st June, then the statement carries all the expenses between May 1st and May 30th. The due date on this statement is usually 20th May or 25th May. For all purchases that are made at the beginning of the month of May, the interest-free period is much longer than the ones towards the end of the month. If customers are able to plan the expenses on the card, they are able to enjoy a longer period that is completely interest-free.
- Ensure the whole amount is repaid:
There is no doubt that the best way to avoid paying any interest on the purchases is to repay the amount that is mentioned in the statement in full. Some customers even set aside a separate account wherein they deposit the outstanding amount in smaller installments. This allows them to repay the amount in whole well before the due date. Some customers may pay the minimum outstanding amount and let the remaining carry over to the next month. The interest is charged only on the remaining amount that has been carried forward. However, this must be avoided in order to pay more for the item than its actual price.
- Avoid any cash advances:
The most important financial advice is to avoid cash advances completely. Unless it is a genuine financial emergency, these cash advances attract huge interests and are also bad for the credit score of the customer. Withdrawing from an ATM using a Credit Card on a regular basis indicates that the individual does not have a good financial standing. It indicates that he or she is unable to generate other possible funds. Therefore the credit score is lowered as the repayment capacity of this individual towards any loan is considered low as well. In addition to that, the interest on these withdrawals is unavoidable as there is no grace period.
- Convert large amounts into Simple EMIs:
In case the customer is making a sizeable purchase using the credit card, HDFC allows the amount to be converted into simple EMIs. The interest charged on these EMIs is quite low. In addition to this, it makes it easier for the customer to repay the monthly outstanding fully to avoid paying interest on the other purchase that he or she may have made on the Credit Card in the previous month. So, the customer saves on the interest partially at least.
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