Always remember that the money on your credit card is not yours. If you don’t want to pay interest on your credit card, here are some things not to do.

1- Pay just part of the credit card balance

When you charge a purchase to your credit card, you get a 21-day "interest holiday" but ONLY if you pay the full amount owing on your purchase before the due date shown on your statement.

Let’s say you buy a laptop for $800 in September. When you receive your statement in early October, you’ll have to repay the $800 in full before the due date on your statement if you don’t want to pay any interest. If you repay just $500, you’ll be charged interest on the full amount of $800, not just the $300 you still owe. In other words, assuming tthe rate on your credit card is 18%, you’ll spend around $12 in interest.

2- Pay your bill late

You expect to receive some money next week, so does it really matter that much if you miss the due date on your statement by a day or two? Sadly, yes! Not only will you pay interest on the full amount owing on your purchases, but the missed payment will end up on your credit report because you didn’t fulfill your end of the contract with the card issuer. It’ll hurt your credit score and, to put it another way, your image as a borrower.

3- Request a cash advance (cash withdrawal)

A cash advance is where you withdraw cash against your credit card account at an automatic teller machine, for example. A cash advance is borrowed money. There’s no interest holiday, which means you start paying interest the moment you withdraw the amount.


A few tips...

  • Before making a large purchase, set some money aside so you don’t pay interest.
  • If you can’t pay the full amount owing on your credit card on the due date, at least make the minimum payment before then. As soon as you get hold of some extra cash, pay off the balance in full.
  • Before taking a cash advance, consider other options, such as getting an interest-free loan from your parents. If you’ve already taken a cash advance on your credit card, pay off the borrowed amount as quickly as possible so you pay less interest.
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