How to use a Credit Card effectively

In this era, the world is moving toward cashless transactions. Even governments are urging to use cards for any type of payments which will not only reduce the cost of producing currency notes but also help in curbing frauds and corruption. Cards include both Debit and Credit Cards issued by banks and other credit firms. Not just to the users but also it is very beneficial for the vendors as it give them secured monitory transaction and receiving of funds direct in their accounts from customer’s account. Different banks and now other financial institutes have also started issuing credit cards. Earlier Credit Card was meant for affluent people only but now number of credit card users has been increasing by many folds due to numerous offers and schemes offered by banks and other issuers. Even, few banks nowadays are offering credit cards to the people who are not even having account with them. On the basis of their credit history and excellent credit score, banks are issuing credit cards with luring offers like, lifetime free card, higher limits, reward points or other shopping benefits. Thus, having a credit card is not so difficult. Most of the users have wrong perception that having a credit card could push them in financial stress. This perception turns out to be true if the usage of credit card is not done effectively.

Credit card gives you freedom to spend at multiple outlets without carrying hard cash. It helps during financial crunch as the transaction made today through credit cards would be paid later after predefined days. This will not only postpone your current financial burden to future but also give you time to arrange funds.

6  ways to use your Credit Card effectively

 There are following 6 ways that can be followed to use your credit cards effectively and responsibly.

Know your credit card– Either you are the new Credit Card holder or existing user, you must know your credit card well. Being a new user, you must know “what is the rate of interest on your spending, credit limit allowed, billing cycle, interest free period, annual charges and fees” etc. All this help you in making decision about when and how much you should spend using your credit card. At the time of applying for credit card ask the higher limit possibilities. Go for higher limit as it gives you more credit to utilize and helps you in improving your credit scores.

Billing Cycle: Knowing the billing cycle is very much important. The billing cycle is of one month and all the transactions made during a bill cycle is included in Bill which is payable after a grace period. This will help you to take your spending decision to enjoy maximum interest free days. For example If your billing cycle is from 10th day of the current month to 10th of next month, the transaction  done on 11th of this month will have more interest free period which is normally of 45 days. Thus by doing this you will more time to arrange funds for payment and too without paying any interest.


Follow the Due dates: Always make your payment on or before your due dates, this will make your good credit history and simultaneously will increase your credit score. With timely payment and excellent score you might get good offers or increase in limit on your credit card. You might also get offers like an add on credit card, personal loan, car loan , home loan or any other  financial products on the basis of your previous credit history.

Avoid taking Cash benefit: All credit cards have some cash limit which you can directly withdraw from ATMs. Always try to avoid doing this unless too important. Using credit cards cash limit attracts more interest than usual transaction at merchant’s outlet or for any other expense. The charges on cash limit used may go 2% to 4% a month and start from the very first day of transaction and without any grace period.. Therefore it not advised to unnecessarily use your cash limit of credit card.

Wisely use your Credit Limit: It is good to have a good credit limit on your credit cards. Higher limit helps you in maintaining your credit scores until used wisely. Using more of your limit would decrease your credit score by some points as it shows your dependency on credit. But if you are habitual of using credit cards then try to have more than one credit card so that your expenses can be divided by using different cash limits of different cards. Your credit utilization should not be more than 30% of available limit.

Rewards: Every credit card offers a series of benefit to the subscriber. One of the benefits is Reward point. To maximize the use of credit cards, issuer offer different programs in which you could earn points on all your transactions through credit cards which possess some monitory value which can be utilize as per the issuer’s policy.  Rewards can also come in other forms like gift vouchers, free access to VIP lounges on Airports; cash back on dine at partner restaurants, etc. Be informed about the benefit associated with your card and utilize to the max.

Avoid luring offers:  You must be receiving multiple offers from your card issuer, before grabbing any offer you must go through all pros and cons of that offer so that you could save yourself to fall in a trap. Not all offers are trap just need to be cautious while choosing any offer.

Maintain Secrecy: This highly important to maintain secrecy of all your credit card details like credit card number, expiry dates, CVV, and PIN. Any compromise could leave you with huge losses. Never share your passwords, pin or card details with any one on phone or in person. Be vigilant while using your card for online transactions. Report any fraudulent transaction or loss of card as soon as you observe it to your card issuer.

Credit cards are the best option for one who understands the importance of using his credit cards wisely. Avail maximum benefit from your credit card by using it responsibly.

Leave a Reply

Your email address will not be published. Required fields are marked *