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Your Credit Card Is Not Just Another Payment Tool. Consider These Tips...

Author: Adhil Shetty/Wednesday, July 17, 2019/Categories: Exclusive

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Your Credit Card Is Not Just Another Payment Tool. Consider These Tips...

If you think that your credit card is just another payment tool, you’re most likely not using it to the fullest. With savvy usage, you will not only enrich your financial transactions with the help of its benefits but also save on your regular expenses.

You must understand how your credit card works and what its primary and tertiary benefits are -- things that should ideally be factored in while choosing a particular credit card. Clarity on benefits coupled with financial discipline are the keys to make the most of your credit card. The latter is extremely important because ideally, your credit card should help you save more, not spend more! Here are a few handy tips to help you make the most of your credit card.

Choose a card based on its benefits

Blindly settling for the card that your bank offers might not always be a good idea because it’s not necessary that the card benefits will align with your lifestyle requirements. You’ll be well-advised to compare all the options you’re eligible for (primarily in terms of minimum income requirement), and closely evaluate usual benefits like cashback, reward points, complimentary travel insurance and special offers while trying to find the right card match. Consider pointers like: if you drive to work every day, you might go for a card that gives cashback on fuel refills, if you’re a film buff, you’ll love a card that gives extra discounts on movie tickets, if you travel internationally, you should go for an air miles card that can be redeemed for discounted flight tickets, seat upgrades, so on and so forth.

Keep a budget for your card spends

The reality behind innumerable credit card horror stories is often reckless spending without completely understanding the rules of the game. It’s important to realize that a credit card is not an extension of your income; all the money you spend on it must be repaid in full on time to avoid hefty interest charges (3-4% per month) among other penalties and an impacted credit score. So, try to set a limit for your credit card spends every month based on your affordability and avoid breaching the limit often. Also try to minimize major unplanned expenses (like costly flight tickets, shopping binges) as much as possible.

The objective should be to clear your card bill in full within the interest-free period every month without jeopardizing your budget for other important financial commitments like utilities, savings and investments.

Evaluate the cost of using your card

While most of us would prefer having a credit card that charges zero annual fees, it’s a fact that certain cards offer a host of meaningful benefits but they do come at a cost. So before signing up, see if the annual fee charged justifies the card benefits or not while not breaching your budget. Also, check if you can get anything in return for paying the annual fee like bonus reward points or complimentary air miles.

Secondly, have complete clarity over things like bill generation day, last day to pay the bill, interest charges, late fees, etc. to ensure you’re on track in repaying the bill every month.

Walk the extra mile to take full advantage of your card

Which supermarkets or shopping portals give the maximum cashback on your credit card? Which transactions will fetch you the most number of reward points quickly? Do your accumulated reward points expire; if so, when? Also, what can they be redeemed for? In short, know everything about your card benefits and devise ways to maximize your savings. You might also want to pay, for example, your grocery bills with your credit card to earn more reward points, and make regular transfers to your credit card account to keep the bill under control.

Credit cards often come with other privileges like complimentary travel insurance when you travel abroad, special discounts at participating merchants like certain restaurants, shopping portals. Make the most of them too.

However, keep in mind to evaluate the cost of availing maximum benefits and ensure you don’t dent your budget in the process. The key lies in striking a balance.

Be savvy with your big-ticket purchases

Credit cardholders usually get 20 days after the bill generation day to repay their outstanding dues for that month without having to pay any interest. That being said, if you’re planning for a big-ticket purchase, you might want to time it to a day after the bill generation day. This would ensure your purchase is billed in the next billing cycle, as such extending your interest-free period from 20 days to 50 days! (The author is CEO,


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