When and When Not to Use Credit Card for Bill Payment?

Posted on Monday, January 24th, 2022 | By IndusInd Bank

Frank McNamara, a New York-based businessman, was enjoying dinner with his wife at a restaurant when he noticed that he had forgotten his wallet. Thankfully, McNamara’s wife paid the bill for his rescue. But given the embarrassment he faced, McNamara thought of developing a financial product that would allow people to “use now, pay later.” And that was the necessity that birthed the invention of the credit card.

This was back in the 1950s. Over the decades, credit cards have become more advanced with premium features, exciting discounts and rewards, and smoother transactions. However, this boon of a product can turn into a debt trap if not swiped wisely.

Given below are the instances where you should and should not use your credit card.

1. Use it to Make Big-Ticket Purchases

Contrary to what you may believe, a credit card is ideal for purchasing big-ticket items such as electronic appliances. You can rake in the reward points and discounts, but most importantly, credit card companies offer fraud protection against big-ticket purchases and may also provide insurance on the items.

2. Avoid in case of an Emergency Cash Requirement

If you are in urgent need of cash, it is best to avoid using credit cards as you will be charged exorbitant cash withdrawal charges and transaction fees. Plus, there’s the interest charged by your bank. A debit card or cheque will be the right choice in light of such expenses.

3. Use it for Online Shopping

By using your credit card online for shopping, you essentially avoid disclosing your debit card information on the internet, over which most of the transaction frauds take place. The same holds true for defective products. If you suspect fraudulent activity or receive a defective or fake product, you can raise the issue with your bank and get your amount back by exercising your right to dispute such transactions.

4. Avoid it if Reward Accumulation is the Only Goal

The reward points, flying miles, and other exciting offers and discounts accessible through your credit card are only useful if you use your card wisely. But making reward accumulation the only goal will leave you disappointed as certain transactions have high processing fees involved, which may negate any rewards you earn. Plus, you may end up making too many unnecessary purchases.

5. Use it for Everyday Purchases That You Can Pay Off

If you use it responsibly, paying for everyday purchases such as grocery bills using credit cards can help you build credit and boost your credit score. Additionally, you may receive cashbacks and reward points on your purchases. But always remember to stay within your credit limit and ensure full payment of your statement.

6. Avoid Using if You’ve Crossed Your Credit Limit

If you have already maxed out your credit card limit or are close to doing so, it’s best to stop using it for any transactions unless you have repaid in full. However, if you really need to make a payment with your credit card, you can ask your bank to raise the maximum credit limit. But remember that doing so can negatively impact your credit score and spiral your expenses out of control.

The Bottom Line

If you wish to make the most of your transactions, make a credit card comparison between banks and different cards offered by your preferred bank. For instance – we at IndusInd Bank offer a wide range of premium IndusEasy cards, each offering unique sets of features and benefits.

Once you’ve found a card that suits your preferences, you can get your card issued in just three simple steps. All you need to do is fill a small form, provide your Aadhaar and PAN details, choose your personalised credit card offer, and you’re good to go!

To know more about one of the best credit cards in India, click here.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.