Credit Cards are more than just tools for quick purchases—they can be powerful financial instruments that provide convenience, rewards, and even credit-building opportunities. However, these benefits come with responsibilities.
From understanding Credit Card payment rules to following best practices, being informed can prevent costly mistakes, like high-interest charges or negative impacts on your credit score. Avoiding common pitfalls, such as carrying high balances or missing payment deadlines, is crucial. If you're new to Credit Card rules and regulations, mastering these essential guidelines can help you maximise rewards, build credit, and stay financially secure.
Top 7 Credit Card rules
1. Choose the right card
Your choice of Credit Cards must align with your lifestyle needs and spending habits. For instance, if you travel
extensively, go for a travel card. If your petrol bill is massive, go for a fuel card. If you love shopping at a
specific retail store, opt for a co-branded retail card. Choosing the right card enables savings, discounts, and
exclusive deals as per your spending habits.
2. Align your credit limit with cash flows
Though your credit limit is determined by the card issuer based on your credit score, income bracket, and repayment
history, consumers are allowed to progressively increase your limit. The best practice is to ensure that your credit
limit aligns with your cash flows, so you do not shop beyond your means. Start with a smaller limit and grow it as
your income grows.
3. Redeem your rewards
Credit Cards come with attractive loyalty programmes. However, many consumers forget to redeem their reward points in
exchange for curated products, air miles, or gift vouchers. Remember, redeemed rewards translate to money saved and
an elevated lifestyle. You can check your rewards via net banking, or on your monthly statement, and redeem them
before they expire.
Also Read: How to get a Credit Card in 3 easy steps
4. Put all spending on your Credit Card
The more you use your Credit Card , the more is the promise of rewards and cashback. Hence, try and put your fixed
monthly expenses, big-ticket spends, and other expenditures on your Credit Cards. Of course, stay within your budget
and do not spend beyond your means.
5. Keep building your credit score
Your credit score, ranging from 300 to 900, is a numerical representation of your creditworthiness. Of this, 700 is
considered to be a good score, while 800 and above is excellent. As your score increases, you become eligible for
superior loan and Credit Card products, with better perks and lower interest rates.
To enhance your score, pay your bills on time and avoid late fees. Avoid paying only the minimum amount, as you will
then be charged a higher rate of interest on the outstanding amount. The best way to ensure on-time payments is to
automate your monthly Credit Card payments.
6. Regulate credit utilisation ratio
Another factor to consider is your credit utilisation ratio i.e. the ratio of your current Credit Card outstanding
balance to your credit limits. The ideal ratio is considered to be 30%. If the ratio is consistently lower than the
ideal, then it means you are underutilising your card. If it exceeds the ratio regularly, it means you are overly
dependent on your card. Both scenarios can result in a lower credit score .
7. Leverage Credit Card EMIs
Many consumers are unaware of the Credit Card EMI facility, where you can split a lump sum payment into smaller monthly
payments, at the point of sale. This facility gives you the convenience of making payments as per your monthly cash
flows. Choose the tenure, interest rate, and EMI as per your needs, get approval and proceed to make the purchase.
Also Read: Demystifying Credit Cards: How do Credit Cards work in India
Conclusion
Credit Cards are more than just tools for quick purchases—they can be powerful financial instruments that provide
convenience, rewards, and even credit-building opportunities. However, these benefits come with responsibilities.
From understanding Credit Card payment rules to following best practices, being informed can prevent costly mistakes,
like high-interest charges or negative impacts on your credit score. Avoiding common pitfalls, such as carrying high
balances or missing payment deadlines, is crucial. If you're new to Credit Card rules and regulations, mastering
these essential guidelines can help you maximise rewards, build credit, and stay financially secure.
FAQs
What are guidelines for the Credit Card?
Guidelines for using a Credit Card responsibly include making payments on time, keeping balances low, and
regularly checking statements for accuracy. Following these Credit Card rules and regulations helps maintain a
good credit score and avoid high interest charges. Additionally, understanding each Credit Card payment rule
ensures you’re optimising your card usage without accumulating unnecessary debt.
What is the golden rule of Credit Cards?
The golden rule of Credit Cards is simple: pay your full balance on time, every time. This Credit Card payment
rule helps you avoid interest charges, late fees, and potential damage to your credit score. Adhering to this
rule also ensures that you can make the most of the benefits and rewards your card offers while maintaining
financial control.
What is the 2 3 4 rule for Credit Cards?
The 2 3 4 rule for Credit Cards is a guideline for responsible credit management. It suggests having a maximum of
two active Credit Cards, waiting three months between new applications, and limiting yourself to four total
cards. This rule helps keep your credit utilisation ratio low, makes payments manageable, and allows you to
follow Credit Card rules and regulations effectively.
What are the rules for Credit Card safety?
Credit Card safety rules are essential for protecting your finances. Key practices include keeping your card
information private, regularly monitoring statements for unauthorised transactions, and using secure payment
channels online. Additionally, following each Credit Card payment rule will help prevent fraudulent charges from
accruing interest, as timely reporting of suspicious activities is vital to maintaining your financial security.
Disclaimer: This article is for information purpose only. The views expressed in this article
are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd.
and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader
for taking any financial decisions based on the contents and information. Please consult your financial advisor
before making any financial decision
