Last Updated on Aug 25, 2022 by Aradhana Gotur

A credit card is a rewarding way to transact. Whether you shop, pay your bills or make any type of payment with the card, you get rewarded. Moreover, credit cards allow you to transact on credit which comes in handy when you are in a financial crunch. 

Besides allowing you a line of credit and rewards, credit cards can also help you save money. Here are 7 effective ways in which you can use your credit card to its fullest potential and also save some bucks in the process.

Choose the right credit card

This is the first step in saving money on credit card use. There are different types of credit cards available in the market, and you can choose a card depending on your spending pattern. Have a look: 

  • Lifestyle-based credit cards that offer enhanced benefits on dining, entertainment, and other lifestyle-based spending
  • Shopping-oriented credit cards that offer accelerated benefits on shopping, both online and offline
  • Travel cards that offer complimentary lounge access, frequent flyer miles, discounts, and privileges on hotel accommodations
  • Co-branded credit cards that allow enhanced benefit if you shop at the partnered merchant
  • Premium credit cards that offer premium benefits for HNIs

Choose a credit card after assessing your transactions. If you have frequent transactions on lifestyle, shopping, or travel, choose the corresponding cards to get the maximum benefits on your transactions and save money.

Understand the benefit structure of the card

Every credit card has its unique benefit structure. Besides the obvious reward points, some of the common benefits available include the following:

  • Cashbacks on transactions
  • Discounts at merchant outlets
  • Accelerated reward points at partnered merchants
  • Fuel surcharge waiver

Understand the complete benefit structure of your card. Then, use the available benefits to claim discounts, cash backs, and free benefits offered by the card. Hunt for deals whenever you shop, and you would be able to save on every transaction.

Use the welcome bonus and spend-based fee reversal

When you buy a credit card, many issuers offer a welcome bonus in the form of additional reward points, gift vouchers, coupons, etc. Use this welcome bonus fully to give you savings on shopping and purchases. 

Furthermore, the annual and joining fee payable for the credit is waived if you make a specified amount in a transaction during one year. So, try and put most of your expenses on your card so that you can fulfil the specified limit. Thereafter, the annual fee would be waived off, and you would save on the same.

Redeem your reward points wisely

Almost every card offers reward points every time you use the card for making a payment. This is another reason why you should maximise your credit card use to accumulate the maximum points. The accumulated reward points can, then, be used for:

  • Paying a part of your next credit card bill
  • For a gift voucher
  • To claim a merchandise from a specified catalogue

Many credit card issuers also allow you to convert the reward points into cash and then claim cashback or get a refund of the same. So, use your reward points wisely. If the card offers accelerated reward points on a particular spend, use the accelerated benefit and get more points on your transaction.

Pay your credit card bills on time

Credit cards have reward points and other benefits, but they also have very high-interest charges if the bills are not cleared on time. Your credit card follows a billing cycle, and the bill is generated after each cycle. Thereafter, you are given a due date to pay off the bill. 

If you clear your dues within the due date, you do not incur any penalties or interest charges. However, if the due date passes, interest starts applying on the outstanding balance. Moreover, there might be a late payment fee too. Both these charges incur additional payments and should, thus, be avoided if you want to save money.

Moreover, missing out on credit card bill payments also impacts your credit score negatively. If your credit score is low, your loan application might either be rejected, or you might have to pay a higher interest rate on the same. In the latter case, a higher interest outgo means higher expenses and is, thus, counterproductive to saving money.

Do not revolve credit

Credit cards have a revolving credit facility. There is a minimum amount due (MAD) on your bill, which you can pay within the due date and then carry forward the remaining balance to the next billing cycle. This is called revolving credit. 

For instance, say your credit card bill amounts to Rs. 12,000, and the MAD is Rs. 2,000. You can, thus, pay Rs. 2,000 and carry forward Rs. 10,000 to the next billing cycle.

Though the revolving credit facility is a saviour in a financial crunch, it should be avoided. The reason – additional expenses!

When you carry forward your credit card balance, interest will apply on the same for as long as the balance is carried forward. Moreover, every transaction you do in the next billing cycle would not enjoy an interest-free credit period. It would also start attractive interest charges from the date of the transaction until the bill is cleared. Not to mention, revolving credit damages your credit score.

So, if you want to save money, do not revolve credit. Pay your credit card bill in full, always.

Opt for credit card balance transfer 

If you have multiple credit cards or if you find a card that has a better reward structure and a lower interest rate compared to your current card, you can opt for a credit card balance transfer. You can transfer the balance of your existing card to another card. This would help you save money by lowering the interest cost. Moreover, if you opt for a personal loan to pay off your credit card debts, you may be able to save some money on the interest outgo, however, you will be piling on an additional loan here.


Credit cards are a great lifestyle enhancer. But they should be used with extreme caution; if not, they can derail your finances. When used wisely, a credit card can not only give you attractive rewards on your purchases; it can also help you save money. So, use these tips and enhance your savings through your credit card.

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