Credit Card spending doubles in 3 years: 5 tips to help you remain financially safe

Credit card spending in India has doubled in the last three financial years. According to the Finance Ministry data, the total value of credit card spending in FY 2021-22 was ₹9.72 lakh crore, which jumped to ₹18.31 lakh crore in FY 2023-24.

The data hints at a growing dependency on credit cards among a large section of Indians. But it's not very surprising, considering the fact that credit cards offer several benefits, including reward points, cashbacks, online shopping discounts, the ability to defer payment till the due date without paying any interest, and much more.

However, one should use credit cards smartly to remain financially safe. Here are five tips that will help.

1. Never miss the due date

2. Make partial payments even before the due date, if you can

Seeing a big credit card bill at the end of the month can be scary at times. Users can make partial payments, if they have cash in bank account, as and when possible, to reduce the final bill.

If you make partial payment only till the due date, no interest will be levied on the full amount, according to the RBI.

The central bank says that credit card issuers cannot levy interest on full amount if the user has made partial payments till the due date.

So, if you fail to clear your bill before the due date, partial payment will help you reduce the total interest and penalty.

"In case a cardholder does not clear the total amount due within the payment due date, interest-free credit period will be lost, and interest may be levied from the date of transaction on the outstanding amount (adjusted for payments/refunds/reversed transactions as and when credited) and not on the total amount due," RBI says on its website.

Additionally, late payment fees and other charges related to delay in payment will be levied only on the outstanding amount and not on the total amount due.

3. Always pay the full amount, not the minimum amount due

Some users often pay the minimum amount due instead of the full amount. This is a wrong practice as in the next billing cycle, the credit card issuer charges high interest on the outstanding amount.

4. Don’t use too many cards, if you can’t manage

You don’t need too many credit cards unless you are a credit card collector or an expert doing credit card business. Most users don’t need more than 2-3 cards. Even one card is enough for many users. Having too many cards can make it difficult to keep track of your expenses and multiple due dates.

5. Avoid EMIs, even if they come with a “no-cost” tag

Unless it is unavoidable, credit card users should avoid buying items or services on EMIs. This is because credit cards charge very high interest rates and often have some hidden charges that you might not know. Even the no-cost EMI offers on credit cards have some hidden costs.