India has always been a large market for debit cards, but in recent years, debt based options, such as credit cards, have gained significant foothold across the nation. A recent report showed that the total amount spent using credit cards (during fiscal year 2018-2019) reached almost Rs.6 lakh crore, a 30% increase from the previous year. Such growth is primarily credited to the changing money market; consumers now have access to a more updated as well as transparent system that helps them use credit-based financial tools without accumulating debt.
One such example of this modernization is the automated credit card payment system. Infrastructure like NACH, or National Automated Clearing House, offers an electronic clearing system that simplifies the monthly repayment system. It is a centralised system, operating under a single set of rules that’s common for all participants. A cardholder can easily subscribe with such facilities to automate bill payments and use a credit card to do more with it.
How to automate bill payments
There are 2 formats used for automated credit card payment. These are –
Via net banking facility –
Most financial institutions offer auto debit facilities from a customer’s savings account. To set it up, a cardholder will have to log-in to their net banking account and correctly issue an auto pay instruction for their credit card biller. The due amount will be deducted whenever a credit card company will issue a billing request.
Via NACH facility –
Auto debit facilities can also be initiated via NACH facility by registering with the credit card issuer. A cardholder can register with this system by submitting the NACH application form, along with a cancelled cheque, to the card issuing financial institution. The automated payment process will be initiated once all the data is verified by the financial institution.
An applicant signing up for auto debit should know about credit card payment using NACH facility’s option. The system allows for multiple payment options, namely –
- Payment of the entire amount – A cardholder can opt to pay the total outstanding card bill automatically every month. It is one of the most common credit card payment methods as it eliminates the risk of default payment or outstanding due carryover.
- Payment of the minimum due amount – Minimum credit card due payment facility allows for automated payment of the minimum due amount. It is a sum that a cardholder pays to avoid late payment fees, and the total due is carried over to the next billing cycle automatically.
- Payment of a fixed amount – Payment of a fixed amount can be setup if a cardholder wants to control automated debit facility from his or her account towards credit card payment. In this scenario, a customer sets a maximum limit that is deducted every month. It can help deduct a substantial amount if the credit card bill exceeds one’s budget for some reason.
Also read Steps To Reach Perfect Credit Score
Why opt for auto debit facility
There are several reasons why a significant number of cardholders prefer auto debit method to pay for their credit card’s bill. Let’s take a look at some of them.
- It eliminates chances of missed or late payment – Automated credit card payment system eliminates the risk of delayed bill payment, helping create a positive credit history. It will also improve one’s credit rating over time.
- It streamlines the process – Automated debit system eliminates the hassle and time taken to make credit card bill payments, making it ideal for busy individuals.
Every financial institution offering credit cards in India offers such facility to their customers. The Bajaj Finserv RBL Bank SuperCard comes with these facilities and more such as zero interest ATM cash withdrawal for up to 50 days, zero interest personal loan against the card for up to 90 days, among others.
Unfortunately, such automated features do not apply for other aspects, such as credit card reward points. A cardholder has to redeem the accumulated reward points before the expiry date to collect discounts, cashback, and other benefits offered under the customer loyalty program. Although, one can check their accumulated reward points online as well as in their credit card statement, which makes it easier to keep track of the same.
It is vital for all users to know how to automate credit card payments and ease the repayment process. Refer to leading financers to avail a feature-rich credit card which can help you repay the credit availed with ease and does not charge high interest rates or other fees on credits as well.