A Credit Card is a financial instrument that comes with a credit limit. You can use this pre-loaded amount to make purchases and pay for them later. Hence, this card is a Debt instrument, letting you buy things now and pay for them in the future. The credit limit on your card is decided by the issuer and depends on factors like your eligibility criteria and credit score.

When you opt for a Credit Card to enjoy its benefits, you need to know how to use it smartly and make the most of it. The following pointers on how to do so:

Opt for a higher credit limit

The maximum credit limit for Credit Card users differs from one user to another. It is typically based on your credit score and eligibility criteria. However, when applying for your Credit Card, ask your bank for the highest possible credit limit. This lets you enjoy a higher limit for your purchases. It also improves your credit score.

Track your spendings

To prevent yourself from getting caught in a debt trap, keep a close watch on your spending. For this, you can list your transactions after every use to track your spending.

Understand the rewards

Today, Credit Cards provide various rewards and offers on specific spending. For example, some cards offer free access to airport lounges. Others provide welcome benefits up to a certain limit. Alternatively, your card could also offer cashbacks on fuel spending or reward points when you make purchases.

So, use your card strategically and understand the reward point system to make the most of your Credit Card benefits.

Pay your dues on time

Credit Card interest rates are charged by your Credit Card issuer on the outstanding balance when you do not pay it entirely and on time. Hence, interest payments become due only when you carry forward the balances of the previous month. This rate usually varies across banks and depends on your credit history. These interest rates can be high.

Hence, if you want to avoid paying high-interest rates and penalties, it is wise to pay your dues on time. This also helps improve your credit ratings.

Check the statement

When you receive your monthly statement, check it carefully and understand the charges. Look for any suspicious transactions, as these could be due to Credit Card fraud.

Avoid withdrawing cash

You can use your Credit Card for withdrawing cash from ATMs. However, it is best to void this unless you are in an emergency. This is because withdrawing cash at ATMs using your Credit Card could attract high interest rates.

Conclusion

By following the listed tips, you can easily use your Credit Card smartly and within your budget.