Used carefully, credit cards don’t have to be debt traps. They can even help you save money
Last year, Pranav Sakhadeo saved ₹55,000 while spending about ₹5 lakh. The 39-year-old freelance writer did it by cleverly using his 21 credit cards. This isn’t an advertisement for credit cards. Instead, it’s a salute to Pranav’s self-control and his habit of reading the rules and benefits of every card.
Credit cards often charge very high interest rates. Many people get into debt because they don’t use them carefully. But Pranav and others like him have learned how to use credit cards as useful tools. Last year, The Economic Times wrote about Suraj Kumar Talreja, who earned reward points worth ₹2 lakh in just one year.
In Western countries, some people even collect rewards by signing up for new credit cards whenever special bonus offers appear. Some earn thousands of dollars every year this way. A study by the US Federal Reserve found that such expert users earned a total of $15 billion in rewards in 2023.
But people like Pranav and Suraj are unusual. If everyone used credit cards perfectly, the companies that issue them would make much less money. For every careful user, there are many others who struggle to pay their bills.
In India, data from RBI shows that more people are falling behind on credit card payments. The number of credit cards in use grew from 6.3 crore in July 2021 to 11.2 crore three years later. During the same period, the total amount owed on credit cards rose from ₹1.3 lakh crore to ₹2.9 lakh crore.
This suggests that more people are becoming “revolvers” — customers who don’t pay off their full bill and keep carrying debt from one month to the next. They end up paying interest. Pranav and Suraj are different. They are “transactors.” They pay their full bill every month and collect rewards instead.
Whether they are buying groceries, paying school fees, or eating at a restaurant, they know exactly which card gives the best benefits. They are careful not to spend more than they can afford. It takes a lot of attention and discipline, but for them, the rewards are worth it.
Disclaimer
Views expressed above are the author’s own.
