One of the main reasons to pay your credit card bill early – or on time – is because of the APR/Interest Rate. The APR is known as the Annual Percentage Rate, or the Interest Rate. Each credit card is given an APR when they are put out on the market. The Annual Percentage Rate will kick in if you are late in paying your credit card bill.
The APR can either be flexible or static. If it is flexible this means that the APR can go up or down without warning. Your credit card company is under no obligation to tell you if and when the APR is going up. This is what you have to watch out for when looking at cards with a flexible APR.
The APR basically means that on top of your original bill that you have to pay, you also have to pay the Annual Percentage Rate as well. When put together with your original credit card bill, this can come to a tidy sum.
So in order to beat the APR (stop it from activating), you MUST pay your credit card bill early, or at least on time. Anything less than that will see you having to pay more on top of your original bill. However, there are two more reasons as to why you should pay your credit card bill on time.
The first one is that if you are late in paying your bill, your name will be blacklisted amongst the names of other people who were late in paying. This can have an adverse affect on your ability to qualify for financial credit later on.
So, in other words, for every day you are late in paying your bill, a negative mark goes against your name. This can affect you if you are trying to apply for a mortgage, or purchase a car (on H/P – Higher Purchase) or for any other type of credit. This is why it is so important to pay your credit card bill on time. But, like a domino effect, it really does affect everything else if you are late in paying.
What you have to understand here is that when you pay your credit card bill, your payments will not go through straight away. So this is one of the reasons you should always pay your credit card bill early, if at all possible. Pay early so that your payments reach the credit card company with plenty of time to spare BEFORE the due date.
Even if you are late in paying your credit card bill by one day, not only does the APR kick in, but there will be points set against your name. Until the bill is paid off in full, your name will continue to be blacklisted. In other words, you will be known as a ‘bad creditor.’
The trick here is, as explained above, to pay your credit card bill early, thereby avoiding having to pay APR on top of your original bill. Also, by paying your bill early or on time, you will avoid your name becoming blacklisted and you will continue to qualify for credit in the future.
One thing to remember when applying for any type of credit card is to stay within your financial limits. By doing this you should be able to pay off your credit card bill time and again – preferably early. By not staying within your financial limits, more often than not, you will find yourself in trouble sooner or later.
Of course, any late payments you make to your credit card provider, you will also have to take into account ‘late fees.’ Late fees, on top of the APR, plus the original bill too, can soon see you begin to struggle, financially, in a big way.
For every day that you do not pay off your bill, a late fee is added on top of your original bill plus your APR. This is why it is absolutely imperative that you pay off your credit card bill early to avoid all the financial hassle that you will undoubtedly face later.
Credit cards are wonderful things, especially if you do not like to carry spare cash around in your pocket. However, in the wrong hands, they can be more akin to lethal weapons. There are just too many people who view credit cards as some kind of ‘free money’ that they can spend whenever they wish.
And this is the major error that the vast majority of people make when applying for a credit card. They simply do not realize that they have to pay back what they have spent. So to avoid those unexpected and nasty charges, pay your credit card bill early. This will save you financial heartache later on.