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    How to Use Your Credit Card Smartly and Stay Debt Free

    The moment you get a credit card in your hands, you start itching to buy expensive things you may or may not need. Before you even realise, you would have piled up huge debt and interest charges. What happens next is even worse. You struggle to pay off the balance and get trapped in a cycle of debt. Even a single late payment can bring your credit score down, along with your overall credit history.

    However, despite all the downsides, credit cards offer a better alternative than cash and everything else. The assumption here is that you are using your card wisely and paying off your dues in time. When you use your card responsibly, you can enjoy some exclusive discounts on everything from travelling and dining to shopping and movies, without even falling into the trap of interest rates.

    Some tips on using your credit card wisely and staying debt free

    • Always pay off your outstanding balance every month: If you have ever been in debt, you know how dreadful it is. That’s why it’s important that you pay off your card balance in full every month. It’s easier to pay small amount regularly than paying a large amount with heavy interest charges. The annual effective interest rate charged by most banks ranges from 23-28%. Additionally, if you are clearing your dues every month, you will naturally keep an eye on your statement, which will help you identify any suspicious transaction charged to your account.
    • Spend responsibly: It’s always easy to charge everything to your card, without thinking about how you are going to pay for it. But never do that if you want to stay debt free. Never look at your card as your source of funding and your credit card limit as your budget for everything you want to purchase.
    • Keep an eye on your spending habits: To stay debt free, it’s important you understand your spending habits. This is very important for becoming a debt-free card user. Try not to spend more than 30-40% of your monthly income in any month.
    • Avoid exceeding your credit limit: Firstly, you should know your credit limit because it’s very easy to exceed that limit if you don’t know it. When you know that limit, avoid going above it. Banks charge heavy fees and penalties for going over the limit. It’s best to keep your balance around 30% of the total limit. This will not only reduce the risk of exceeding the credit limit, but will also help you improve your credit score.
    • Redeem your reward points: Redeeming reward points is one of the best ways to save some money while buying expensive things. You can redeem those points at any partner merchant store or online. But did you know these reward points can expire if not redeemed on time? The period varies from bank to bank, but eventually they expire. Make sure you use your redeem points before they expire.
    • Avoid using multiple cards: When it comes to credit cards, more is not always better. When you carry multiple cards, it gets tough to keep an eye on balances and due dates of each one of them, which can result in late payments. It’s best to have only one or two credit cards, so you can manage them properly. If you think your credit card limit is too less, you can get it increased by requesting your bank for a review.
    • Consolidate your debt to one card: Consolidate all your credit card debts to a single card to avoid forgotten payments. When you consolidate your debt, you will have to take care of just one payment rather than multiple payments for each card.
    • Avoid using your credit card to withdraw cash: Taking out cash using a credit card? Think twice! Unless it’s really an emergency and you have no other option, you should never use your card to withdraw cash. When you do so, the bank starts charging interest right from day one.

    Choose the right credit card

    Managing your debt properly gets easier if you have the right card for your lifestyle needs. Why pay a huge annual fee for a travel card when you are not a frequent traveller? So, before you get a card, it’s always best to understand your lifestyle and then choose the one that meets your requirements. Check out different types of credit cards you can choose from:

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