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9 Ways to Use Credit Cards Wisely

For many people, credit cards are no less than a lottery ticket. It is a way to afford things that you can’t otherwise afford. Effective use of credit cards has several advantages. Credit cards can help you build credit history, increase your credit score, convert big purchases into affordable EMIs and earn attractive cashback and rewards.    

You can check out different bank credit cards here.

However, ineffective use of a credit card may land you in serious trouble. As you don’t pay it in cash or don’t find a debit message on your phone, credit card payment gives you a false sense of affordability.

If you have recently applied for a credit card or looking to apply for a credit card, here are some ways that can help you use your credit card/s effectively:

1.Don’t overspend

Every credit card comes with a credit limit and free credit period of 30 to 50 days. Banks will increase your credit limit if you use your credit card regularly and pay dues on time. However, you need not use your credit card for all your expenses. If you use your card for all your expenses, you may start to feel that you can afford things that you actually can’t. It can cause overspending.

Hence, it is important not to overspend while making payment using the credit card.        

Related Article: 10 Things You Should Know Before Applying for a Credit Card

2.Decide when you will use your credit card

To not overspend while using your card, it is essential to decide when you will use the card. It is best to use your cards to make payment for wants and not needs. Your money in the bank account should take care of groceries, utility bills and other monthly expenses. On the other hand, you can use your credit card to pay for your wants such as movie tickets, restaurant bills, flight and railway booking, etc.  As these expenses are non essential, you can easily cut these expenses during an emergency.

Related Article: How to Build an Emergency Fund in a Savings Account

3.Pay off all dues at the end of your credit cycle

If you want to use the credit card wisely, it is important that you pay off all your dues before the due date. Late payment will not only result in interest rate charges and other charges but also take a toll on your credit score.  If you are using a credit card without an annual fee and pay your bill on time, you are basically getting the benefits of the credit card with no additional charges. So, it pays to pay off all your dues on time.

Related Article: 6 Credit Card Myths You May Not Know About

4.Don’t miss your payment

Paying your credit bill every month is the first step towards the right use of your credit card. If you cannot pay your entire bill at one go, just pay the minimum monthly amount that you need to pay on your credit card. Although you may have to pay interest on the balance, you will still be better off than paying nothing.

5.Convert your large purchases into EMIs

Missing a payment and carrying balance to the next month is not the right use of your credit card. It can have a negative impact on your credit score. A poor credit score can make it hard to apply for other credit cards or loans.

We understand that you may have to incur a large expense sometimes. In this situation, converting your large purchase into affordable EMIs will be the right use of a credit card.  This facility will help you pay an amount every month towards your purchase without creating a havoc of your monthly budget.

6.Keep your credit utilisation ratio low      

Just because you have a credit limit of Rs.5 lakhs, it is not necessary that you have to use the entire or even 50% of your credit limit. To keep your credit score from slipping, keep your credit utilisation ratio below 30%. This means that if you have a credit limit of Rs. 5 lakhs, you should not ideally use your credit card to make payments beyond Rs.1.5 lakhs in a cycle.

7.Spread your purchases among different credit cards

As keeping a low credit utilisation ratio is necessary for a healthy credit score, if you have more than one credit card, you can spread your purchases among different credit cards. This way you are able to use your credit cards regularly, and keep a low credit utilisation ratio of your cards.

8.Know when to use a particular credit card

While spreading your purchases across different credit cards can help you keep a low utilisation ratio, you need to know the right use of the specific credit card. E.g. you can gain more benefits by using a co-branded credit card at the particular outlet than the other credit card.

To avoid the mental mess while making transactions, make a note of the different facilities of the credit cards.    

9.Redeem your points and other benefits  

You can earn reward points by using the right credit card to make a purchase. After you accumulate the minimum necessary reward points, you can redeem these reward points on or receive vouchers, cashback etc.   

Credit card providers offer different ways to redeem your reward points. You may buy products from a catalogue, get vouchers that can you can redeem at specific online or offline stores, or get the reward points converted into cash that is credited to the credit card account.

Besides checking the offers on your credit cards, know how you can redeem your reward points. The reward points of most credit cards have an expiration date. So, use your reward points and make the best use of your credit card.


Use of Credit Cards is like a double-edged sword. You can reap attractive benefits if use your credit card wisely. On the other hand, improper use of your credit card can land you in credit card debt.

Here we have shared nine ways that can help you use your credit cards better and reap the maximum benefits.     


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