How to Use Credit Cards Wisely 


Credit cards have become the go-to tool to meet short-term financial requirements. The best part about credit cards is they not just provide financial assistance in emergencies but also offer a lot of rewards and benefits.

However, using it wisely is a skill that should be developed by every cardholder to avoid falling into debt traps. For instance, not paying the bill on time would lead to interest charges on the entire amount due, and the cardholder would end up paying a lot more than required.

To avoid this, we have a list of practical tips that will help in better usage of credit cards.

1. Get the Right Card

One should get a credit card that matches the financial requirements; this will require a proper understanding of one’s spending habits. Cardholders should check the fees charged, the interest rate, the rewards, and other benefits offered by various cards to make a well-informed choice.

2. Know the Billing Cycle

Every card comes with its billing procedure. The first thing an individual must be aware of after getting a credit card is the billing cycle. The billing cycle could vary between 25-45 days or more depending on the type of card. Purchases can be timed post the bill generation, as this will give an interest-free period of around 45 days or even more.

3. Set up Limits

Using a credit card is similar to taking a small loan from the bank. Cardholders can easily create a sub-limit within the credit limit offered to them by accessing the settings on the bank website or mobile app. This helps in monitoring spending habits, keeps expenses in check, and helps avoid maxing out the limits.

4. Smart Repayment

Credit cards these days offer the facility of converting large purchases or the entire bill into EMI payments. This facility, if used wisely, can help manage one's finances as well as take care of various necessities.

5. Timely Payments

It is always advised to pay the bills on time. This helps avoid late fee charges, and interest charges and also gives cardholders a better credit score and credit history. A good credit history makes it easier to get access to loans in the future.

6. Avoid Cash Withdrawals

Withdrawing cash from credit cards is a bad idea as the cost involved by way of interest rates and fees is quite high. One can use this option of borrowing as the last resort only, and not otherwise.

7. Set alerts and auto-debit

It isn’t possible to remember the due dates of 3-4 credit cards or more. This could lead to missing out on payments and paying excess interest and late fees. To avoid this, one can set alerts that notify the due dates to ensure timely payments. Cardholders could also opt for the auto-debit feature offered by banks.

8. Security

While making any purchase (online/offline), it should be ensured that one is dealing with a trusted merchant. Also, cardholders can limit the usage of the "Tap to Pay" feature to avoid misuse of the card.




It is important to remember that a credit card isn’t free money; it is a loan. By following the above-mentioned tips, individuals can use their credit cards wisely as a financial tool and maintain a good credit history that will help them in the future. Check Federal Bank's Beginner's Guide to get maximum benefits from a credit card!