Credit cards can be a convenient and rewardin way to pay for your purchases, but they also come with some risks and responsibilities. Here are some pointers on how to get the best out of credit cards:
1. Choose a credit card that suits your spending habits and lifestyle.
There are different types of credit cards, such as cashback, rewards, travel, co-branded, etc. that offer various benefits and features. You should compare the annual fees, interest rates, rewards programs, and other perks of different cards and pick the one that matches your needs and preferences. You can use online tools like or to find the best credit card for you.
2. Pay your balance in full and on time every month.
This is the most important rule of using credit cards, as it helps you avoid paying interest and late fees, and also boosts your credit score. If you only pay the minimum amount due, you will end up paying more interest and taking longer to clear your debt. If you miss a payment, you will incur penalties and damage your credit score. You can use features like autopay or reminders to ensure timely payments.
3. Keep your credit utilization low.
Your credit utilization is the ratio of your credit card balance to your credit limit, and it affects your credit score. Ideally, you should keep your credit utilization below 30%, which means you should not use more than 30% of your available credit at any given time. For example, if you have a credit card with a limit of Rs. 50,000, you should not spend more than Rs. 15,000 on it. You can lower your credit utilization by paying off your balance frequently, requesting a higher credit limit, or using multiple cards.
4. Redeem your rewards wisely.
If you have a rewards credit card, you can earn points, miles, or cashback on your purchases, which you can redeem for various benefits. However, you should be aware of the terms and conditions of your rewards program, such as expiry dates, redemption options, and fees. You should also compare the value of different rewards and choose the ones that give you the best return. For example, if you have a travel credit card, you may get more value by redeeming your points for flights or hotels than for gift cards or merchandise.
5. Use your credit card responsibly and securely.
You should treat your credit card as a tool, not a source of free money. You should only spend what you can afford to pay back, and avoid using your credit card for impulse purchases or unnecessary expenses. You should also protect your credit card from fraud and theft, by keeping it in a safe place, checking your statements regularly, reporting any suspicious transactions, and using secure websites and networks when shopping online.
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