How to Manage Credit Card economically know in and out


    Contributed by Mihika Ghosh, works as a Digital Content Creator at Fit. Credit

    While the credit card base grew by 12.4% in India, credit card spending grew a strong 43% annually despite a rise in UPI payments. This surge in credit card spending can be attributed to rewards, online shopping, a growing credit card base, and utility payments.

    With a fair credit score of more than 650 and a regular monthly income, one can conveniently qualify for an all-purpose credit card with their preferred bank. But, between handling expenses with multiple credit cards and falling into a debt trap, it is wise to know how can one manage a credit card wisely and use it to its maximum advantage without hurting their credit score.

    Managing Credit Card Debt
    While credit cards present a great boon in the form of free credit that can quickly fund your expenses, they also come with a bane of overspending, which can very well put you in financial debt.

    Here are the best ways to manage a credit card: Use Limited Credit Cards
    We know why you have 4-5 credit cards in your wallet -some cards are more suitable for grocery shopping, while others may offer better benefits for dining out, cabs, or movie bookings. However, you can save yourself from the nightmares of keeping track of your expenses by limiting the number of credit cards you maintain.

    Look at 1-2 cards that give you maximum benefits for the majority of your purchases. You can probably use one primary card for your regular expenses, while a secondary card could be useful for other specific benefits.

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    Keep a Check on Your Spending Habits
    To steer clear of spending blindly, you can track the categories you spend most on. For instance, the moment you realize that you are spending more on ordering food out than actually buying groceries, you could probably end up saving a lot more money.

    To curb unnecessary spending and go beyond your credit limit, set spending alerts thatcan give a real-time response to your spending pattern. You can do so by setting a threshold on the credit limit or on the transaction value to ensure that you don’t exceed your spending limit for the month.

    Pay Bills Diligently
    Pay your credit card bills in full and ahead of time to avoid interest payments and earn an interest-free grace period, which usually lasts until the next due date. Even if you can’t pay in full, make sure you pay the required minimum amount for each month instead of skipping complete payments to avoid the late fee. Paying your bills diligently will impact your credit score positively as it reduces your credit utilization. This will make getting a loan in the future easy.

    Don’t Overstretch Your Wallet

    Managing credit card debt can be daunting. So, refrain from maxing out or spending anywhere near your credit limit to avoid long-term financial issues such as debt, poor credit score, and additional fees. A good practice is to always use 40% of your available credit, just like your debit card or chequebook, especially if you cannot save to pay it off later.

    1. Beware Of Fraudsters
      Cases of online financial fraud using credit or debit cards increased by more than 225% amid the pandemic according to National Crime Records Bureau’s (NCRB) 2020 report. It is getting easier to become victimized by credit card fraud schemes that can slam you with a
      huge bill and a whole in your bank account.
    2. To avoid getting into fraud schemes
       Never share your credit card pin or CVV in a public space
       Do your online shopping only on securely encrypted websites
       Regularly monitor your account to keep a tab on any fraudulent transactions, and report any such transaction to your credit card company immediately to dispute the charges.
    3. While meticulous and prudent handling of a credit card can offer flexibility and many lifestyle-lifting benefits, make sure you spend within your means and become efficient in managing credit card debt wisely.
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