7 Smart Ways to use Credit Cards without paying interest

Whipping out a glittering credit card to pay for your fancy meal, without having your precious money debited from your bank account, sounds like a dream life. But the chickens do come home to roost, when you’re expected to pay off the entire amount – or face the prospect of falling into the deep, dark hole of paying (or attempting to pay) usurious rates of interest.

No need to avoid credit cards altogether, though. Contrary to the fear-mongering around their usage, there are ways to use credit cards, taking advantage of all that they offer, without paying even a penny in interest. Here are 7 of the smartest ones:

A credit card bill doesn’t have to be a monthly surprise if you keep track of your spending, says the author (Photos for representational purpose only)

1. Pay off the entire amount:

There are usually two amounts mentioned on your credit card bill – the total amount due, and the minimum one. If you don’t want to pay 40% interest on your bill, completely disregard the ‘minimum amount due’.

The only number that matters is the total bill, and you simply need to pay that off in full. This is an absolutely non-negotiable rule, and if you are sort of rebellious and don’t want to follow seven rules, follow this one at least.

2. Decide your bill in advance:

A credit card bill doesn’t have to be a monthly surprise. Instead of spending mindlessly and then living in anxiety till you pay off the bill, decide how much you will realistically be able to pay off, and only spend that much on the card.

Of course, this doesn’t have to be exact to the decimal, but at any given point you should know broadly how much you’ve spent. Thankfully there are apps for tracking this now, so there are no excuses.

3. Mandatory expenses only:

We all have expenses that we, unfortunately, have to pay every month, no matter what. Usually, these are payments for utilities, groceries, or transportation.

Use the credit card only to pay for your essentials

Then there are the expenses that come once a year or once every few months, like insurance premia or healthcare expenses. These are the only expenses that you should put on your credit card.

There’s a good reason for this seemingly arbitrary rule – it’s proven that shoppers spend much more (up to 100% more according to a study) – when using credit cards rather than cash. Therefore, the only expenses on your card should be the ones where there is zero scope to overspend.

4. Keep track of your due date:

Unlike other bills, which are usually generated on the 1st of every month, the credit card bill is specific to you. While one person’s might get generated on the 7th, another’s might be on the 15th of the month.

You wouldn’t want to join the legions of people who ended up having to pay interest and penalties, just because you forgot your due date. A simple monthly reminder on your phone would suffice to keep you falling into this trap.

5. Don’t be adventurous while paying:

You’ll be flying too close to the sun, if you decide to pay right on the due date. Digital transactions fail all the time, but you’ll be the one on the hook if this one does.

Maintain a buffer of at least a couple of days before the due date, so that you can be rest assured that the bill is actually paid off. Then, in case of any unpleasant surprises, you can simply try again, without falling afoul of the due date.

6. Set up auto-pay:

Do you know a sure-fire way to never forget to pay your credit card off? It’s a nifty little tool that is, in my opinion, highly underrated – the autopay.

Activating autopay with your bank to pay your credit card bill will ensure that you don't miss the due date

An autopay is basically a standing instruction to your bank to pay off your credit card bill. You can choose how many days before the due date the bill will be paid.

You can also choose the amount above which you would want to be consulted before making the payment. Anything below that gets automatically paid off. It is that easy. You don’t have to remember the due date; you don’t even have to remember that you need to pay a bill.

7. Don’t save your card:

You know that tiny little check-box that implores you to save your card details on your favourite shopping apps? Don’t fall for that. Sure, you can save your card on your grocery delivery app, but Amazon and Nykaa? That’s just asking for trouble.

If you do use your card for online purchases (resolutely going against the third rule), at least give yourself 30 painful seconds of having to locate your card and key in the details every time you buy something. It might just save you from an astronomical bill that you can’t hope to pay off.

Credit cards are a tool of the modern financial world, and should be used smartly to maximize their benefits while avoiding the pitfalls. In a way, they are like a knife – it would be stupid not to use a knife for things it’s meant to do, like cutting fruits. One only needs to be careful, and if one isn’t and ends up getting hurt, it’s not the knife’s fault!

Priyanka Mashelkar is Dy. Commissioner of Income Tax and Author, 15 Sure-shot ways to Hit the Jackpot