Using Credit Cards well

I am quite surprised by the fact that there are several people who have no idea how Credit Cards work. First of all, most of these them think that if they have paid the ‘Minimum amount due’, they can pay the ‘outstanding amount’ whenever they feel like, and no extra amount needs to be paid.



I had 3 such discussions with different people. The first one had splurged huge amount of money on his credit card and paid half the amount. He thought, he will pay the balance next month but he did not know that he will be paying interest to the tune of 2.5 to 3.5 % per month on the outstanding balance.


Second one had spent a few thousands on his card, and paid back most of it, except Rs 1000. He had linked his account to the credit card, so the ‘minimum amount due’ was debited every month to his bank account. He thought he just needs to pay Rs 1000, but the fact is he would be paying huge interest per month on the outstanding balance.


Well, I got my first Credit Card when my first salary account was created. I was scared of credit cards then, since I had heard too many stories of people ending up paying huge amounts of interest on their cards. So, I did not use it for an entire year. Then I moved to a different city and started getting to know the ‘credit cards’ better. So, I took the initiative and used it. And well, there has never been looking back thereafter.


Somewhere in the middle, I had spent a lot of money on my card but over the years I have learnt to limit my expenses and work around the cards well.


So, the rule of the game is you should always memorize the statement and due dates well. Say your statement date is 20th of July, so once your statement is generated, the best time to use the card is immediately after that. So, you can use it on 21st, 22nd, 23rd and so on. This amount that you have spent on your credit card will feature on your bill only on 20th of August and the due date before which you need to make the payment, will be somewhere around 5th of September, so you will have ample time to pay back! Easy.


Also, it works well if you use only 1 card, or maximum 2. It is easier to remember all important dates plus you accumulate all points on a single card, which you can redeem for several benefits!


So, use your Credit Card intelligently and enjoy the benefits!