A credit card is one of the most convenient financial tools, offering users a flexible credit option for day-to-day purchases or emergencies. Whether you’re shopping online or paying bills, the right use of a credit card can simplify your financial needs while earning rewards.
However, when misused, it can lead to debt traps and lower credit scores. So, what can you do to maximise your credit card’s potential benefits while maintaining financial discipline? Let’s take a look.
Understand your credit card’s features and benefits
Before diving into the specifics of using a credit card wisely, it’s important to understand the credit card features that make them beneficial. Credit cards have become convenient as they offer a free period to repay the amount you use. Apart from this, each card offers unique benefits like cashback, reward points and travel perks. You can also convert your big-ticket purchases into equated monthly instalments (EMIs) for a hassle-free repayment.
Many digital platforms allow users to quickly compare the features and benefits of various credit cards. This enables the users to choose the best credit card as per their needs. For instance, Moneycontrol, displays credit card offers from top banks, which are tailored for eligible users based on their credit profile.
Credit Card Usage: Easy tips and best practices
Keep an eye on your spendingA common mistake many credit card holders make is overspending. It is easy to lose track of expenditures when you’re swiping or tapping a card instead of using the real cash. One of the fundamental credit card tips is to monitor your spending. Use your bank’s mobile app or an expense-tracking app to log your purchases regularly. This ensures that you remain within your budget and avoid unnecessary debt. Another good practice is to set up transaction limits on your credit card for different categories like dining, groceries or online shopping. This keeps your financial goals on track while allowing you to enjoy credit card benefits.
Set an ideal transaction limit
While you can request the card issuer for a suitable credit limit, it entirely depends on the issuing bank or the non-bank financial company (NBFC) to decide the credit limit for your credit card. However, you can set a transaction limit as per your needs to avoid overspending in future. This will help you to maintain a low credit utilisation ratio and consequently your credit score will improve. You can also fix the limit for online transactions and disable the card usage above the approved limit to avoid over limit fees.
Always check your credit card statement
Careful scrutiny of your credit card statement is one of the best practices for staying on top of your finances. Every month, thoroughly review your statement to ensure that no unauthorised transactions have taken place. This is essential for detecting fraud early and ensuring you’re charged correctly. Sometimes, merchant names may appear unfamiliar on the statement, so double-check every purchase.
Maximise free offers and rewards
One of the many credit card features is rewards programmes and special offers. These rewards range from cashback on purchases to air miles for frequent travellers. Make sure you understand the specifics of the rewards programme attached to your card. Often, banks offer special discounts and promotions during the festive season or on certain platforms. For instance, many credit cards offer a plethora of benefits, including complimentary insurance against accidents, easy access to reward points and shopping vouchers. You can use these to offset your everyday costs or accumulate reward points for future travel or purchases.
Get The Best Credit Card Offers
Pay your credit card bills on time
Timely payment of your credit card bills is critical to keeping your finances in check. If you do not pay your credit card bills on time, you will incur high interest rates and late fees, which can pile up fast. Moreover, late payments can significantly damage your credit score, affecting your future ability to borrow. Set a reminder on your phone or automate your payments to avoid missing due dates. It’s always a good idea to pay your bill in full each month to avoid interest on unpaid balances.
Avail easy EMI facilities if required
Many credit card companies offer easy loan EMI based on your spending history and credit limit. This facility allows you to convert large purchases into affordable monthly EMIs without the need for additional documentation. This is particularly helpful when you are short of funds. It allows you to spread out your payments over a flexible tenure, keeping your expenses under control while addressing immediate financial needs.
Make use of contactless feature
In today’s world, contactless payment has become the norm. The Reserve Bank of India (RBI) increased the limit for contactless transactions from ₹2,000 to ₹5,000, making contactless credit cards an ideal choice for hassle-free payments. You don’t need to enter a PIN for payments below ₹5,000 — just tap the card on a POS machine, and the payment is processed instantly. Several banks now offer contactless credit cards, which enhance convenience while minimising physical contact during transactions.
Avoid cash withdrawals
While most credit cards allow you to withdraw cash from ATMs, this feature should be used only in emergencies. Withdrawing cash using a credit card attracts hefty interest rates from the moment of withdrawal apart from cash advance fees.
Monitoring credit score and improving it
Your credit score is a vital factor that determines your financial credibility. Credit card usage, when managed well, can significantly improve your credit score. Regularly monitoring your credit score allows you to understand how your credit card usage affects your financial health. Moneycontrol app and website allow users to track their credit scores and view personalised credit card offers based on their financial profile.
Final Words
A credit card is more than just a means to make payments — it is a powerful financial tool when used responsibly. Whether you are a seasoned cardholder or a first-time user, following these best practices will help you make the most of your credit card while maintaining financial discipline.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
