While credit cards are a useful tool for essential purchases, it’s vital to use them responsibly. Excessive reliance can lead to financial troubles and debt accumulation. Maintaining a balanced approach to credit card usage is essential to safeguard your financial stability.

Banks often provide credit card limits of up to double an individual’s salary for employed individuals. Some, however, misuse this limit, overspending and struggling to repay the bills. To avoid financial strain, it’s vital to use credit cards wisely, stay within one’s means and make timely bill payments for a secure financial future.

Using a credit card wisely involves a key recommendation: limit your spending to only 30 per cent of the credit limit. For instance, if your credit limit is Rs 1 lakh, avoid exceeding Rs 30,000 in expenses on the card. By adhering to this guideline, you can comfortably manage your bill payment within the 30 per cent range.

Experts strongly advise against exceeding the 30 per cent credit limit, as it may lead banks to view you as someone relying heavily on borrowing. This practice could have adverse effects on your credit score or CIBIL score. Maintaining a credit utilisation ratio below 30 per cent is highly recommended as it establishes a positive credit history, paving the way for better financial opportunities in the future. Being mindful of your credit utilisation ensures a secure and promising financial outlook in the long term.

The CIBIL score plays a vital role in determining your creditworthiness for banks and lending institutions. It influences loan approvals and predicts your ability to repay debts timely. A positive credit score enhances the likelihood of loan approval with favourable terms, while a lower score may limit your borrowing options.

Paying your credit card bill on time holds the utmost significance in maintaining a positive credit history. Even if you cannot clear the full bill amount, it’s essential to at least clear the minimum due before the due date. Experts advise against closing old credit cards; instead, keeping them active helps build a longer record of your payment history, which positively impacts your CIBIL. The older the credit card, the stronger it bolsters your creditworthiness, ensuring better financial prospects.