5 Rules of Smart Credit Card Use

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A decade or so age, credit cards hardly existed in the market and spending was linked with earning. The phrase ‘save for a rainy day’ was the mantra instead of ‘you live only once’. While the new mantra enjoys the credit cards, many are not aware of the smart way to use credit cards leading to misuse and debt. 

It is important to understand that credit cards can truly be a delight if you know how and when to use them. 

Here are some tips on how to better use your card

Need-based spending

Do not splurge. Credit cards may entice you to overspend on almost every item. An expensive watch, those extra pair of shoes, additions to your wardrobe, or one more collectible – a credit card with their one swipe has made it enticing to purchase things that you do not need. You need to own things, but buy those items you can afford. 

Stick to your monthly budget. Understand your expenses and value your earnings. Credit cards are available to make purchases easy for you but that under no circumstances would justify unnecessary shopping sprees. You have to repay the amount at the end of the billing cycle, and a non-payment leads to heavy penalties or interest rate. 

Respect the Limit

Always be aware of the credit limit assigned to you. Do not go too close to the limit on your card. In case you feel that you need to increase your limit, have a discussion about it with your creditor before overshooting it.

If you happen to fully charge your credit card it may impact your credit score. 

Pay on time and pay fully

Always ensure that you pay off your card bills on time. Although there is an option of paying only the minimum balance, you must try and monthly settle off the entire amount on your credit card bills. 

Paying just the minimum balance only regularly will not just lead you to a debt cycle but also negatively impact your credit score. Credit card issuers would not view this action positively, and this may lead them to sense financial trouble.

Cash advances

Although credit cards do offer cash advances in dire circumstances, you must only use this feature in case of a genuine need. A cash advance on your credit card is high on interest making it costly.

Remember to take a cash advance only in cases of urgent and extreme circumstances.

Rewards and Offers

Be on the lookout for the kind of rewards and offers offered by the credit card/s you own. Based on your spending, you will earn bonus points that can be used smartly for making other purchases and even adjusting your balance.

Hence, speak to your card issuer’s customer care regularly to understand their offers and read the promotional mails that the credit card issuers send regularly.

In conclusion, credit cards can truly enhance your financial experience. It is important to calculate the amount of spending that you can afford on your card and stick to the budget. If used right, they can also help you save and invest your idle cash balances well. If you use them with precaution and care, you will find that using credit cards is a rewarding experience.


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