A credit card offers great convenience but at the same time, it’s important to exercise caution while using it.

5 Practical tips for using a credit card during the pandemic

With the serious economic implications of the pandemic, it has become increasingly important to manage our finances in a prudent manner. And as we navigate the new normal, we are compelled to reanalyse our spending habits, including the way we use credit cards. Wondering how you should use your credit card? Here are some helpful tips on using your credit card wisely during a global emergency 

1. Transfer your credit card balance 

During such financially difficult times, Credit Card Balance Transfer can be a saviour. You can opt for this facility to help ease the financial burden. If you have outstanding balances on a credit card and are not able to pay it in full transfer your balance and shift to a new lender or another bank that offers a lesser interest rate. In this way, the credit card holder is able to shift to a lower interest rate card and reduce the debt burden from existing cards. You might also be able to save on finance charges and other penalties. Some banks may also offer 0% interest rates for a limited period or other deals on credit card balance transfer.

2. Pay your bills on time

You might not be using your card much during the lockdown and are probably not spending as much. In such times, it’s possible to slacken off and delay paying your credit bill since it might not be a high amount. But this is not advisable. Delaying your credit card bill during the pandemic is only going to bump up your liabilities as the interest keeps accruing. This will result in unnecessary higher charges later on. So keep a tab on your credit card bill as you normally would and clear your dues promptly and regularly. 

Related: 5 Things you should know about credit cards

3. Avoid unnecessary spending

If you are working from home, you are likely to feel the urge to indulge in online shopping. However, going on a shopping spree armed with a credit card is not recommended during a pandemic. Unplanned and unnecessary expenses can cause a serious dent in your finances, especially in times when there is a higher chance of unforeseen medical emergencies. You must ensure that you don’t get carried away when shopping online and overspend on your card. Discretionary spending on luxury items should be avoided; spend only on essentials like utility bills, household necessities, etc. 

4. Don’t waste reward points

All credit cards offer reward points that you can accumulate and redeem later. Keep a tab on the number of points you have gathered, as well as their expiry dates, and try to redeem them within that period. If your card offers cashback on categories such as groceries, fuel, and everyday purchases, grab it. If you have accumulated a significant amount of reward points, use these points for essential expenses and save some money. 

Related: Why the Debt Snowball method is the best way for women to settle their credit card dues?

5. Maintain a good credit score

Having good credit is important in the best of times, but it can be even more so during a crisis. Your credit score is determined by your payment history and credit utilisation limit. Try to maintain a healthy credit score by keeping an eye on your credit report and paying your bills on time. It’s equally important to maintain your credit card utilisation within 30% of your credit limit. For example, if your credit limit is Rs 2 lakh, try not to spend more than Rs 60,000 every month. Follow this rule and you will find yourself in a financially sound position in the long run. 

Related: Here’s how every woman can build her credit health

Last but not the least – be mindful of your situation. Have urgent bills to pay? Do you have a medical emergency? Have you lost your job? Analyse your goals based on your situation and use your credit card judiciously. If you don’t use it wisely, you could spiral down the credit slope and get caught in a debt trap. How smartly do you use your credit card? Find out with this quiz