How to Use a Credit Card Wisely: 7 Important Tips

Credit cards have become a convenient and mainstream tool worldwide. With credit cards, you always have the convenience of paying later, converting your big-ticket purchases to EMI and maximising reward points. However, misuse or overuse of your credit card can damage your credit score. Using a credit card may lead to overspending, here are a few smart tips on how to use your credit card to improve your financial situation.

Tips on How to Use Your Credit Card Wisely

1. Choose the Right Card

Learning how to use a credit card responsibly can yield a multitude of benefits. With the market offering a wide array of options, the key lies in selecting the right card for you. It’s crucial to pick a credit card that aligns with your lifestyle and financial aspirations.

Are you seeking a credit card to maximise rewards or facilitate large purchases? Comparing the benefits and fees offered by different credit card issuers can aid in making a more informed decision.

2. Track Your Expenses

Credit cards offer the convenience of tracking your expenses. However, it is important to monitor your spending patterns to avoid outstanding debts and penalty charges. For instance, One Credit Card offers you the security of tracking and managing your expenses through Insight, a feature on its app.

3. Know Your Credit Limit

Set a credit limit that allows you to settle outstanding dues on time. For instance, a high credit limit could tempt you to overspend, while a low credit limit can affect your spending capacity. Overusing your credit limit can damage your credit score and attract an over-limit fee. Review your credit statements to check your expenses to avoid exceeding the credit limit.

4. Timely Repayments

An important aspect of owning a credit card is making timely payments. Late or delayed payments can lead to debt accumulation and interest. They can also attract late payment and interest charges, affecting your credit score. To avoid this, you can set up an auto-pay feature that helps you make timely payments.

5. Make the Most of Your Rewards

Rewards are the most exciting part of owning a credit card. To maximise rewards, choosing a credit card that aligns with your needs is important. Depending on your credit card issuer, rewards can be discounts, cashbacks, and offers. You can use these rewards in various categories like shopping, travel, fuel, utilities, etc. For instance, One Credit Card offers 2% Reward Points for every spending, which can also be redeemed at 10% value. Additionally, it provides 5X Rewards for the top two categories every month.

Also read: Understanding OneCard Rewards Programme

6. Avoid Only Paying the Minimum Amount Due

Pay off your balance in full every month to avoid interest charges. Paying only the minimum amount due leads to debt accumulation. If you cannot pay the full amount, try to pay more than the minimum amount. This ensures better financial management and a timely payment schedule.

7. Stay Aware of the Hidden Charges

Many banks or credit card issuers are not transparent about all the fees they charge to credit cards. To avoid being charged at the time of billing, ensure that you read the terms and conditions of the credit card issuer properly. Look out for late payment charges, cash advance fees, and additional credit card fees and charges.

Credit cards can be useful financial tools for day-to-day expenses if used wisely. Managing your credit card with the discipline of timely payments and monitoring your credit can ensure efficient usage. By following these essential tips above, you can take control of your finances and make the most of your credit card.