Credit cards are one of the most convenient instruments for payment. Their utility goes beyond the convenience, in the sense that credit cards also help in numerous other ways, such as bringing in offers on various categories of spends like entertainment, transport, dining, etc. As useful and convenient the credit cards are, they turn into financial destructors when outstanding bills are not paid on time.  

Additional Reading: How credit card debts can prove risky

Here are a few pointers that you should keep in mind when it concerns the credit card outstanding bill 

  • A credit card bill comes with two figures on the outstanding column: one is the total amount outstanding and other is the minimum amount due 

  • The outstanding figure has to be paid in full for each billing cycle, i.e. the total amount outstanding is the figure to be paid, not the minimum amount due 

  • By paying the only the minimum amount due, you can avoid paying only the late payment fee, however, interest is still payable on the remaining amount 

  • Credit card debt is the most expensive debt to own. Don't be carried away with the small interest rates of 3-4% shown on terms and conditions of the credit card. It is 3-4% per month which works up to 36-48% interest over a period of 1 year 

  • Once you do not pay the full amount, any further spending on your credit card also amasses interest even though it is not past the due date 

Considering these points, it is good to ensure that your credit card outstanding bills are paid well before the due date. One of the easiest ways to ensure that your bills are paid on time is by setting up an automatic debit for your outstanding figure each month. When you set this up, the amount payable gets automatically debited from your bank account each month.  

There are more advantages to it than being asked about the payment every month.  

  • Regular credit card outstanding bill payments bring in a positive effect on your credit score 

  • Good credit scores mean availability of credit whenever you need it and that too, at favorable terms 

  • If you have been consistent in your outstanding payments, you may be considered for a credit limit upgrade 

  • It will help you put your finances on track. You can leave aside the worries about getting your credit card bill date wrong 

  • Automatic debit saves you the time and effort, which you would need to put in each month to pay your bill manually 

  • Also, you can avoid chances of paying a wrong figure 

However, there seems to be some disadvantages in setting up an automatic debit facility for your credit card bill.  

  • You have no control over the figure being paid to the credit card issuer. The automatic debit feature is helpful when you keep a tab on your transactions. However, in cases where your card has had an unnoticed fraudulent transaction, then you may end up paying for that amount too 

  • An individual does lose control of his/her account to the credit card issuer 

  • Also, laxity can build up over a period of time, as you are ensured of your bill being paid 

  • Automatic debit is not helpful if you are looking to convert some spending into EMIs and the amount gets debited before you can inform the bank.  

  • Each time your bill is presented to your bank, you have to ensure that there are adequate funds in your bank to clear the bill. Or else you may end up paying overdraft charges or risk your bill being rejected for payment.  

There are different payment options available for setting up an auto debit. 

1) Only Minimum Amount Due: You know that you need to pay at least the minimum amount due to avoid late payment fee. So that is the bare minimum figure that you should pay. So, you could set up an auto debit facility for the minimum amount due figure and decide to pay the amount over and above the minimum amount manually.  

2) Auto Debit for The Entire Amount: This is the option where you decide to pay the entire amount due to your credit bill. As and when the bill is presented, any amount reflected on the bill will be debited from your account.  

3) Set A Fixed Amount for Payment: If you have an idea of the range of your credit card bill, you can set that amount for the auto debit facility. Any amount over and above this limit can be paid manually by you. For Ex: If your bill is in the range of Rs. 10000-12000 every month, you can set Rs. 10000 as the auto debit figure and pay the amount over and above manually.   

The benefits of setting up an auto debit feature for your credit card bill seems to weigh more than the disadvantages. Let us now look at the ways through which you can set up an auto debit facility.  

Each credit card issuer/bank has their own procedure for registering for an auto debit facility.  

There are 2 broad ways of registering for the auto debit facility 

1) Through Your Credit Card Issuer: You can set up an auto debit facility through your credit card issuer. To enable the auto debit facility, you would need to download the NACH (National Automated Clearing House) form, fill in all the details and submit the same to your card issuer along with a canceled cheque leaf. While filling this form you can choose your option for payment among the ones listed above, i.e. the full amount, the minimum amount due or a fixed amount.  

2) Through the Internet Banking Facility from Your Bank: Another way you can set up an auto debit instruction is through the internet banking channel. You can log on to your account and select your credit card issuer like any other regular biller and set up an auto pay instruction.  

Key Takeaways 

There are numerous other ways to pay an outstanding credit card bill like through PayTm, UPI, NEFT, IMPS, through a cheque, etc. Don’t let the logistics and procedures involved in a bill payment deter you from you making regular payments. For being regular with payments is the only way you can ensure a good credit score