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Using a credit card to somehow meet your daily financial needs and using it smartly to enjoy unmatched benefits are worlds apart. To use the card smartly, the cardholder has to voluntarily exercise financial discipline and always bear in mind the tips listed below; these would also help them extract maximum from the card.


Timely repayments of the card dues: The first crucial point about using a credit card is to ensure that you pay the dues on time.
  • The beauty of using credit cards is that you get an interest-free period of up to 50-55 days (depending on your transaction date) on all your purchases with the card.
  • However, at the end of the billing cycle, you would be sent the monthly statement mentioning the total outstanding.
  • To maintain a high credit score and keep yourself from niggling financial worries, pay off the dues by the payment due date.

Check your spending habits: Never forget the fact that the amount you spend on the card needs to be repaid in full. And it’s you who would have to pay it to your lender.
  • Try to avoid the temptation of overspending thinking that you don’t have to repay the amount instantly. Be very clear about your repaying capacity and spend accordingly.
  • One way of resisting this temptation is to remind yourself that the interest rate on the card can be as high as 42-44% p.a.

Make the best use of reward points: The reward points accumulated on the card need to be redeemed carefully after analysing all the available options and your needs.
  • For instance, if you are a frequent traveller, you can redeem the points for booking air tickets or for hotel reservations (if the card allows).
  • One of the attractive options of redeeming the points is the long list of gifts and services from popular and reputed brands.

Avoid cash advances: The facility of withdrawing cash from ATM by the use of the credit card is called cash advance.
  • Cash advances are accompanied by interest rates (40% - 45%, still higher on some cards) which are higher than the rates that you pay on your purchases with the card.
  • In addition, you would also be charged a cash advance fee of around 3% of the withdrawal amount.
  • So unless the need is pressing, it’s wise to avoid to withdrawing cash with the credit card.

Be aware of the options in the market: From time to time, you should explore the credit cards that are new in the market and try to understand the features and benefits that they offer.
  • If you come across any card whose offerings are way better than the ones that your card is providing and at similar fees, talk to your card issuer and try to get a better deal.
  • You can even opt for a new card if you feel that the benefits of doing so would prove to be a wise financial decision for you.

Maintain a healthy credit utilization ratio: The credit utilization ratio on your card is the percentage of the credit limit that you use during any particular billing cycle.
  • An ideal credit utilization ratio is anything below 30%. This also helps you immensely in maintaining a high credit score.
  • If your credit card expenses are such that you find it difficult to keep your credit utilization below 30%, request your card issuer to raise the limit on the card.

A credit card turns out to be a financial blessing if used smartly. If you adhere to the points and tips listed above, you would certainly experience and enjoy new financial possibilities that your card would bring to you.

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