A credit card is a convenience that can be a godsend for most of us. It enables cashless transactions, purchases on credit, helps manage cash flows, and get reward points and cashbacks. However, if you’re not careful, they can lead to debt and penalties that can be tough to get out of.

Here’s how you can plan your credit card usage.

Plan your monthly budget and don’t spend beyond this limit

• Pay off your dues in full and on time
• Frequent missed or late payment leads to an increase in interest rate or to lowered credit limit
• If you have to carry a balance on your card, clear this off as soon as possible. Credit card interest charges can accumulate fast and get you into a lot of debt.
• Cash advances carry higher interest rates. The interest rate is charged from day one, without grace period.

The minimum payment option can lead you into a debt trap

• The more balance you carry over, the more interest you incur.
• Even your new purchases will be charged an interest within the grace period.

Don’t miss payments and avoid making late payments

• Enable text and email alerts for your credit card dues and due dates
• Set up auto debit to clear your dues on time every month

Enable email alerts that send you a message when your card has been used in a transaction, when you’re nearing the credit limit and so on

• These enable you to keep track of and manage your card usage.
• They also enable you to spot unauthorized usage and alert the card issuer to rollback the transaction or take appropriate action.

Use your credit card to manage your finance and cash flows

• If you charge your monthly expenses to your credit card, pay them off before the due date.
• If you have a pending bill but not enough funds on hand, pay with your card, but pay off this charge on time to avoid interest charges.
• For expensive purchases, use loan or EMI facilities instead of using your credit card.

Keep Your Card Account Secure

• Try and get a card with EMV chip and PIN

Limit your usage at gas stations in remote areas

• Gas stations have not yet started using the new card readers required for the chip and PIN cards

Remote gas pumps are easy targets for skimmers that capture credit card information

• Keep Your PIN secure. Don’t give it out to anyone. No one should ever know your PIN.
• Receive transaction alerts and also check your credit card statements for unauthorized usage.
• When you’re in a public place like a restaurant, keep your card safe. Don’t leave it where anyone can access it.

Plan your budget, monitor your card usage to keep track of spends and spot fraudulent usage. Pay off dues on time and don’t accumulate balances. The more balance you carry over, the more interest you pay on it.