10 Ways to use a credit card without muddling your budget

Credit card users in India have increased by almost 2.5 times in the last few years, from Rs 2.98 crores in 2017 to Rs 7.02 crores in 2022. But while the number of users has increased, many are still unaware of some credit card benefits and how they can use a credit card smartly.

Continue reading for useful insights on credit card benefits and how to use a credit card for better financial management.

Credit card benefits you must know
 

There are plenty of reasons to use a credit card, and some of the prime ones are –

• Buy anything on credit
  
  One of the top reasons to use a credit card is to shop for things you want, even if you don't have the required finances. Whether you want to purchase a new pair of shoes or upgrade your existing smartphone, you can use a credit card to pay for them. The money won't be deducted from your savings account but from a credit limit on your credit card. You can repay the used amount within the 45-day billing cycle, and your credit limit will be restored.
• Interest-free cash withdrawals
  
  Situations like medical emergencies, household repairs, or car accidents can occur anytime, and you may need significant funding to overcome them. You can use a credit card during such contingencies to withdraw cash from an ATM and meet your emergency financial requirements. Some credit card providers allow interest-free cash withdrawals up to a certain limit, with no interest being charged for up to 45 to 60 days.
• Just swipe and pay
  
  Credit cards are extremely convenient to use. You can use a credit card to swipe and pay at merchant outlets, like a debit or ATM card. All you have to do is remember your four-digit credit card PIN. Some issuers even provide contactless credit cards that can be used for making payments through a simple tap or wave at Point of Sale (POS) terminals. In addition to this, you can also use a credit card to make online payments through secured payment gateways.
• Earn cashback and reward points
  
  Another exclusive feature of credit cards is that you earn cashback and reward points when you use them to pay for groceries, travel tickets, entertainment, dining, or online shopping. These benefits are added to your credit card account and are redeemable before a specific expiry date. You can use your credit card reward points to receive exclusive discount vouchers and gift hampers.

How can a credit card help in financial management and budgeting?
 

Credit card benefits are not limited to shopping and cashback. You can also use a credit card to streamline financial management and budgeting. Here's how -

• Keep track of your spending
  
  When you use a credit card to meet all your monthly expenses, you can easily keep track of your spending. All you have to do is log into your phone banking app and glance at the unbilled amount to view your current monthly spending. If that figure is nearing or crossing your monthly budget, you know it's time to proceed cautiously. You will also receive monthly credit card statements where you can see the details of all your spending.
• Convert large payments into EMIs
  
  If you want to buy a new washing machine but doing so is disrupting your entire budget, a credit card can be a boon. You can use a credit card to pay for the machine and repay the amount next month when you have sufficient savings. You can also convert your repayment into Equated Monthly Instalments (EMIs) of up to 12 months to make your purchase even more affordable.
• Use a credit card for your short-term needs instead of a personal loan
  
  When you take a personal loan to meet your short-term financial requirements, paying a new EMI every month creates an additional burden. However, when you use a credit card for the same, you are not mandated to repay in EMIs. You can pay the borrowed amount next month or next to next month when you have surplus funds. You can simply repay the minimum due, and the leftover balance will be added to your next billing cycle.
  
  However, you should be mindful of the interest charges levied on the remaining dues.
• Use credit card rewards as a bonus
  
  There are multiple ways of using your credit card rewards or cashback. One way is to use them monthly to pay utility bills or movie tickets. Another way is to keep them for emergencies or big-ticket spending. For example, if you plan to travel abroad, you can start accumulating your reward points and pay for the flight tickets when you have gathered enough points. This will give you that extra space in your travel budget.
• Improve your credit score for future needs
  
  If used wisely, a credit card can help you boost your credit score significantly. Every time you use a credit card to meet your monthly expenses and then repay your credit card bills on time, your credit score gets improved. This will help you obtain loans and credits in the future without facing any difficulties.

Conclusion
 

A credit card can be a very useful tool if utilised smartly. From meeting your running expenses to tackling emergencies to managing your budget, it can be a one-stop solution for all your financial worries and monthly budgeting.

IDFC FIRST Bank offers instant credit cards as per your requirements. You can enjoy lower interest rates, earn reward points with no expiry dates, use a credit card to shop with more than 300 merchants and get exciting discounts all year long. For more details, click here.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank 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 mentioned. Please consult your financial advisor before making any financial decision.