How to use your credit card responsibly

Posted on Monday, July 17th, 2023 | By IndusInd Bank

We live in a world fueled by convenience and digital transactions. Credit cards are integral to managing our financial needs. But with great purchasing power comes great responsibility. Thus, it is essential to use your credit card responsibly. In this blog, we will talk about some tips on using your credit card responsibly. This will help you in making better financial decisions and get the maximum benefits out of your credit card.

What is a credit card?

A credit card is a financial tool offered by a bank or non-banking finance company (NBFC). It allows you to access funds for shopping, travel, bill payments, and much more. Every credit card has a specific limit set by the issuer which you can utilise for your monthly spending.  

The credit limit is pre-determined by the card issuer and is provided based on your creditworthiness and other factors. It is a convenient way to manage cash flow and build a healthy CIBIL score. But paying your dues on time is crucial to avoid accumulating too much debt.  

A credit card also offers a variety of benefits, such as rewards, cashback, lounge access, travel points, etc.

Top tips to use your credit card responsibly

Select the right credit card

Today, every bank / NBFC / FinTech offers credit cards with different features. The availability of numerous options to select from makes the process of choosing the right credit card difficult.

If you are a first-time user, you can go for a basic credit card with a minimum credit limit, which is usually free. But if you have specific goals and preferences, you can compare the features of different credit cards and select the one that suits your goals and lifestyle.

Set a budget

To avoid overspending, you should create a monthly budget to use your credit card. People tend to overspend more than their usual budget when using credit cards and forget about the debt aspect. Access to a credit limit creates the temptation to shop more. Ultimately, it becomes a difficult task to repay the accumulated debt.

Having a budget will save you from overspending, accumulating considerable debt and falling into a debt trap.

Set a spending limit on your credit card

You can set a spending limit on your credit card and bifurcate domestic and international spending using your bank’s mobile application. This will help you spend within a limit. It also provides added security in case of theft or loss of your credit card.

Repay the dues on time

You may hold more than one credit card, and you might miss the due date unknowingly.

If you fail to pay the credit card bill on time, you will attract a high interest rate from the issuer for the late payment starting from the due date, till the amount is repaid.

There is also an option to pay the ‘minimum amount due’, using which you can pay a partial amount. Keep in mind though, it attracts interest on the unpaid amount until it is repaid in full. Hence, you should clear your dues in full and before the due date.

You can set up ‘auto pay’ / ‘auto debit’ from your bank’s mobile application to ensure that your dues get paid on time. For this, you need to maintain enough funds in your account to clear your credit card dues.  

Avoid credit card EMIs

You can pay your credit card dues by converting the amount into EMIs. However, this may attract processing fees. Also, a percentage of the monthly EMI goes towards the interest component, so you usually end up paying more than you would spend on a cash purchase.

Take benefit of the reward points

Every time you use your credit card, the bank adds reward points to your account. Once you accumulate enough reward points, you can redeem them through the bank’s mobile application and use them for shopping and credit settlement.  

Typically, these reward points are valid for a specific time; hence you must redeem them within the time limit to avoid a lapse of the reward points.

IndusInd Bank’s Credit Card reward points on the other hand do not expire – you can redeem them whenever you require. A unique benefit of IndusInd Bank Credit Card reward points is that you can convert these points to cash. This cash can even be used to pay your credit card bills, which brings your money full circle.   

Review your spending

Tracking your credit card spending is essential. You can log in to your bank’s mobile application and review your credit card statement. This will help you track your expenses and avoid overspending in the future.

Do not use your credit card to withdraw cash

You can withdraw cash from your credit card at any ATM and get cash instantly. But it is important to note that the credit card provider charges interest for a cash withdrawal from the cash advance date. Apart from interest, you may also be charged a high cash advance fee for withdrawing money using your credit card.   

Take the necessary security measures

With the rise of digital banking services, there is also an increase in card-related frauds. It is essential to take the necessary measures to avoid being a victim of scams.  

Fraudsters can get access to your credit card number, CVV number, one-time password (OTP), etc. by tricking you. To prevent such fraudulent activities, it is recommended to not share your card information with anyone.  

Conclusion

Mastering the art of responsible credit card usage is a skill that you should adopt for your financial well-being. Your credit card is a financial tool that empowers you to make purchases on a cash advance and build a healthy CIBIL score. Having a budget, paying the dues on time and keeping track of your expenses can help you maintain a healthy financial lifestyle.

You can apply for IndusInd Bank Credit Cards online from the comfort of your home and get an instant credit card. It is a completely digital process that does not require you to submit any physical documents or visit the bank branch. From dining and entertainment to shopping and healthcare, you get exclusive discounts with IndusInd Bank Credit Cards.

Apply now!  

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the author’s views 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.