What Are The Things To Consider While Using Credit Cards?

The safety of credit cards is to be seen primarily in two contexts: financial security and information security. With a credit card, the two are interlinked. If you practice safe credit card habits, there’s nothing to worry about.

First, let’s tackle financial security. Credit cards offer reward points, deals and discounts, cashback, aspirational lifestyle experiences, and no-cost equated monthly instalments (EMIs). These are over and above the interest-free payment window. However, these benefits pay for themselves only when you repay your dues on time. The smartest credit card users do not roll their dues over to the next month. They settle them in full and on time the same month. The typical credit card has a rate of interest of 2-4 per cent per month. If you avoid the late payments and interest charges, your credit score gets better, which makes you eligible for the best loan and credit card offers. On the flip side, late payments can wreck your credit score and make you ineligible for fresh credit, and the compounding interest will create financial stress.  

Next, let’s understand infosecurity. India is one of the safest countries in the world for credit card users, thanks to the measures enabled by RBI. Checks and balances apply in every transaction.

The chances of your credit card being misused by someone else are next to nil. In fact, in most cases, you’d have to do something unsafe to be defrauded.

Consumers can avoid all known forms of credit card fraud. When transacting online, sensitive data—card number, OTP, CVV, and expiry date—needs to be shared only with a reputed merchant or payment gateway via a secure internet connection on a personal computer or phone. Anything else could invite trouble.

When transacting physically, always know where your card is. Let the swipe happen in your presence with PIN authentication. Banks now give you app controls to decide which transactions you want to do and which ones you don’t. For example, a common fraud in the past was unauthorised use of cards from foreign locations. Now, if you’re in India, you could simply switch off international transactions via the app, and just as easily turn them back on if you’re travelling. You can also control how much you want to spend, offline or online, domestically or internationally, on the main card or the add-on card.

In addition, you have the levers of your financial safety and information security in your hands. So, understand them and use them responsibly to get the best out of your credit card.

The author is the CEO and co-founder of Bank Bazaar.