Imagine Arjun loves shopping for his family and friends, and he usually spends ₹50,000 each month. His friend Ravi advised him to use a credit card wisely to earn cashback and rewards. Within a year, Arjun earned ₹ 12,000 in cashback and free travel points worth ₹ 8,000, just by following a few strategies.
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Like Arjun, you too can make the most out of your credit card. Let’s learn how to use credit cards wisely and maximise their benefits.
What Are Credit Card Benefits?
Credit card benefits include rewards such as rewards that include cashback and travel points, as well as exclusive discounts on shopping or dining. All these incentives are tied up with the way one makes use of the card. The better the understanding of the card, the more benefits can be enjoyed.
According to RBI, in India, banks can issue credit cards either directly, through a subsidiary or by partnering with an existing bank that already offers credit card services.
Key Strategies to Maximize Credit Card Benefits
| Strategy | What to Do | Example |
| Choose the Right Credit Card | Select a card that matches your spending habits. | A travel credit card earns points for frequent flyers. A grocery card gives higher cashback for groceries. |
| Use Cards for Daily Expenses | Pay for everyday items using your card, but stick to your budget. | Buying monthly groceries of ₹10,000 can earn you ₹200 in cashback with a 2% cashback card. |
| Earn Sign-Up Bonuses | Meet spending requirements to earn extra rewards. | Spend ₹ 30,000 in three months to get a bonus of ₹ 5,000 travel points. |
| Redeem Rewards Wisely | Use rewards for high-value items like travel tickets or big purchases. | Redeem 10,000 points for a flight ticket worth ₹5,000 instead of smaller rewards like gift cards. |
The Power of a Good Strategy
Consider Rina, a working professional. She carefully analyzed her expenses:
- Monthly Groceries: ₹15,000
- Fuel Costs: ₹5,000
- Dining Out: ₹10,000
She used:
- A Grocery Cash Back Card: Earned 5% cashback on ₹15,000, saving ₹750.
- A Fuel Rewards Card: Saved 2% on ₹5,000, totaling ₹100.
- A Dining Rewards Card: Earned ₹300 as 3% cashback on ₹10,000.
Total Savings Per Month: ₹1,150
Total Savings Per Year: ₹13,800
How Indicators Like Credit Utilization Impact Rewards
Your credit card’s rewards only matter if you manage it well. For example:
- If you spend ₹30,000 on a ₹1,00,000 credit limit, your credit utilization is 30%. This is healthy for your credit score.
- Overspending (₹90,000) raises your utilization to 90%, hurting your credit score and negating benefits.
Benefits of Combining Credit Cards
Using multiple cards for specific purposes can boost rewards:
- Card A: 5% cashback on groceries
- Card B: 2% on fuel
- Card C: 3% on dining
This combination ensures you get the best rewards for each category without overspending.
Linking Credit Cards with Loans
A credit card can also complement other financial tools, for instance, a personal loan. Personal Loan Balance Transfer allows you to free up space in your budget for everyday credit card spending after reducing high-interest debt.
Conclusion
Arjun, Rina, and many others take advantage of credit cards by planning their spending and truly understanding reward maximization. Thus, every rupee you spend-from cashback to travel points-may come back to you multiplied in value, if you know how to maximize benefits.
Pick a good card, utilize credit correctly, and enjoy rewards wisely, and you can even turn normal expenses into savings and perks in your life. Remember, like any financial tool, credit cards are meant to be used responsibly without running debt or causes for its long-term gain.
