Credit Cards: Late payment can also cost you non-claim bonus on general insurance, reward points, credit limit and more
A no-claim bonus is a discount that insurance providers give if an individual does not make any claims during a policy year. Non-payment of credit card dues can reduce your bonus. This can also lead to a low credit score.
Credit cards are an attractive financial option, especially when you face a cash shortage. But, in order to avail the maximum benefits from credit cards, it is crucial that one makes all credit card repayments on time. Delayed or non-payment of dues can lead to adverse consequences. This can lead to an individual’s credit score going down. It can also impact the reward points, credit limits and non-claim bonus on general insurance.
Here is what non-payment of credit card dues can lead to.
No-claim bonus on general insurance
A no-claim bonus is a discount that insurance providers give if an individual does not make any claims during a policy year. It is applicable on a range of insurance policies including general, vehicle, and health insurance. In case the credit card dues are delayed or unpaid, the card holder may lose the no claim bonus on insurance.
Credit limit and credit score
A credit score denotes a person’s ability to take new loans and repay existing dues. It ranges between 300 and 900 and is used by credit agencies and lenders to calculate if any new loan can be taken by an individual. A credit score of 750 and above is considered good for getting a loan on favourable interest rates. Non-payment of credit card dues may lower a person’s credit score. It can even reduce their credit limit or the maximum amount they can spend using their credit card. Card issuers can also hike the premium to be paid on the credit card if the payments are delayed.
Reward points
The reward points accumulated on a credit card by an individual could be reduced if the payments are delayed. Card issuers may take away the benefits on account of non-payment of dues.
How to avoid delays in credit card payments
Delays in credit card payments can be avoided if a person enables the automatic payment option in their bank account. This can ensure that their bills are paid on time. Apart from that, people need to chart out a detailed repayment plan and ensure a portion of their income is set aside for credit card dues. This can help them stay on schedule when it comes to their credit card instalments.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.