Things to remember while paying your premiums with a credit card

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Insurance is a crucial step in financial planning. There are various types of insurance– some ensure your well-being during emergencies, and some ensure you don’t burn a hole in your pocket while dealing with any kind of damage to assets like a house, car, etc. And yet sometimes people tend to delay it til the time they feel the brunt of it. The cost of delaying insurance can be very high, because you may not get adequate coverage, definitely not at a favourable cost.

Getting insurance early on helps you get maximum coverage and also offers you more options. This is when the flexibility of credit cards comes in handy. Most insurance companies provide the option to pay through a credit card. However, there are a few things you should be aware of before pulling out your credit card to pay for insurance.

1. Check if your premiums are set on automated mode

Auto-debit is a great way of ensuring you never forget a premium. It also helps you avoid late payments. If you are sure you want to continue with your policy and insurance provider, it can be rewarding to pay your premiums through a credit card. However, if you plan to change or port your policy, the procedure may become tedious.

2. Check for additional charges

Some credit card providers may charge convenience or processing fees on top of your premium amount. The amount may vary from one insurance provider to another.

3. Keep your credit utilization ratio in check

You have to ensure your premium amount isn’t above the healthy credit utilization ratio. Exceeding that ratio may affect your credit score.

4. Pay your bill on time

The golden rule of credit applies here too. Not clearing your credit card dues on time will draw a hefty interest rate. You may also be charged late payment fees which ultimately will increase the cost of your insurance. If you are unable to pay it off at once, you can try and convert the outstanding amount into EMIs. However, remember to check the interest rates on EMIs before going ahead.

To ensure your credit usage is impacting your credit score positively, track and manage your credit cards on OneScore