In recent years, the popularity of credit cards in Nepal has skyrocketed with the growing convenient EMI payments for almost every purchase. However, while credit cards provide flexibility and can be even lifesavers at times, it is crucial you know how their interest works to avoid being overloaded with debts.
Don’t worry if you are not entirely familiar with how its interest works. In this blog post, we will guide you on how to avoid the debt bullets of credit interest using our easy-to-use Saral Banking Sewa credit calculator. So, let us get started!
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Unless you always pay your credit card bill in full every month diligently, the interest rate doesn’t matter much. However, if you carry a balance, then yes, it absolutely does matter because that interest rate determines how fast your debt can grow and potentially catch you off guard.
For example, if you did not pay your bill in full on time, the remaining balance is carried over, and banks will begin to charge interest on it daily. But that’s not all! Even on the new purchases, they will charge you interest from the very day you make them.
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In addition, despite the specified annual or monthly interest rates, the effective rates can be higher or lower, depending on how you manage your account. It is because interest gets calculated on a daily basis, not annually, and is charged only if you carry a debt balance from month to month.
That’s not all! If you fail to repay even the minimum due amount before the final due date, additional late payment fees also tag along to your accruing interest debt.
Therefore, paying off the entire credit card bill on time is an ideal scenario with 0% interest where you don’t have to worry about overloading debts from interest charges.
Having that said, sometimes it is not feasible to clear all credit bills on time. At such times, you can use Saral Banking Sewa’s credit calculator to find out accruing interest on your debts and make effective financial planning.
Can’t clear out the credit bill entirely? Banks in Nepal offer payment schemes like a partial or certain percentage of the due amount at the end of every billing cycle. It is one of those flexible benefits that everyone seems to love about the credit card. However, if you are not careful while enjoying this benefit, it can quickly drown you in an unexpected debt.
Moreover, not many credit card holders are aware that paying even the smallest percentage of the due debt amount significantly reduces increasing interest amount.
So, as a responsible credit card holder, you need to track accruing interest and reduce it timely. How do you do it? It's easy! All you need is Saral Banking Sewa’s creditease calculator where you can determine how much interest is adding up and how much you can save on interest by paying down part of your credit debt.
Using the creditease calculator of Saral Banking Sewa is easy. All you need to do is,
Once you input these values into the calculator, you can get your current monthly, annual, and over five years interest charge. After that provide a percentage of the balance payment you could make and find out how much interest charge you can save monthly, annually, and over five years.
For instance, if your average balance is Rs. 1,00,000 with an applied interest rate of 25% per annum, your monthly interest charge would be Rs. 2,083.33 and can become Rs. 1,25,000 over 5 years. However, if you paid down your balance by 25% only, your current monthly interest charges drop by Rs. 520.83 and Rs. 31,250 over 5 years.
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While paying your entire credit bill on time makes interest rates irrelevant, it may not always be feasible, resulting in a debt balance. Instead what you can do is make minimum payments on time and calculate how much interest charges are accumulating using tools like Saral Banking Sewa’s credit calculator to maintain and manage your credit score.
