Finance

Learn How To Set Up An Auto-Debit Facility For Credit Card Bills

Credit Card

Getting a credit card is the best option to access short-term credit in times of need. It comes with a predefined credit limit that you can use to purchase goods and services. Your credit limit is decided by your issuing bank based on your credit score. 

To make the best use of a credit card, you will need to ensure to pay outstanding bills on time and in full. Failing to make on-time repayments adds interest charges to your credit card bills at the end of every month. Due to your busy lifestyle, you can forget to pay your credit bills on time, and therefore, setting up an auto-debit facility becomes all the more necessary. 

What is the auto-debit facility? 

An auto-debit facility is a credit card bill payment option that you can opt for if you have multiple credit card bills to pay at the end of every month. It is offered by the credit card company or your issuing bank upon your request.  

Not everyone chooses the auto-debit facility to make credit card bill payments, as everyone’s needs and preferences differ. You can activate your credit card auto-debit through your credit card issuer or net banking.

What are the benefits of the credit card auto-debit option?

A debit card debit facility has several benefits that you can avail of to avoid paying interest charges or incurring penalties. Here are the benefits of setting up an auto-debit facility for your credit card bills: 

  • An auto-debit facility ensures timely and consistent payments of credit card bills.
  • The best part is that you can avoid paying unnecessary interest charges, late payments fees, etc. 
  • It is a convenient and hassle-free way of making credit card bill payments. 
  • It reduces the risk of identifying theft. 
  • You can build and maintain a healthy credit score through consistent payments of your credit card bills. On-time credit card bill payments can also earn you reward points. 
  • You have flexible payment methods. You can choose to pay the total amount due or the minimum due amount. 

Different ways to set up the auto-debit facility for your credit card bills

Here are the top two ways through which you can set up the auto-debit facility:

Through your credit card issuer

You can choose to set up a credit card facility through your credit issuer. Download the National Automated Clearing House (NACH) form, fill in your personal information, and submit it to your credit card issuer. You will need to attach a canceled cheque leaf with your application as well. While filling your form, you need to choose your payment option. You can choose to opt for the total amount due, the minimum amount, or a fixed amount.

Through internet banking

It is an easy and more convenient way of setting up an auto-debit facility.  You will need to log in to your internet banking account with your username and password. Select your credit card for billing and set up an auto-debit instruction based on your preferred payment option. 

Things to consider while paying your credit card bills

There are certain things you must be mindful of while paying your credit card outstanding bills, which are: 

  • Your credit card bill comes with two figures – the total outstanding amount and the minimum amount due. You will need to choose one based on your needs and affordability. 
  • If you are opting for the total outstanding amount, you will need to pay the amount in full. It means that if the balance amount on your credit card is Rs. 20,000/-, you will have to pay the full amount, not the minimum amount due. 
  • As with the minimum amount due, you will need to pay only a certain percentage of the total amount due. You can avoid paying late payment fees, but you still have to incur interest charges on the remaining amount. 
  • It is worth noting that if you do not pay the total amount, your interest charges increase with any further spending on your credit card. 

Considering the above-said factors, it is always better to pay your credit card outstanding bills on time and in full. To ensure that your bills are paid on time, you can set up an auto-debit facility for the outstanding balance. After setting the auto-debit instruction, the amount payable gets debited from your bank account every month.

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