The use of Credit is omnipresent in this modern age. You are unlikely to find any individual around you who does not use a credit card or two. While millennials have embraced the use of credit, there are naysayers who still believe that credit cards can get you into trouble and are a first step towards a debt trap. After all, there is an abundance of anecdotal evidence of people going overboard with their credit card usage only to find themselves in a position where they are unable to make repayments.

A situation like this can be disastrous for one’s CIBIL score. The next thing you know is that when in the need of urgent credit, the individual in question has no other choice but to opt for a personal loan for low CIBIL score, because a traditional lender will not entertain you on account of your poor credit score. But, the moot point over here is, credit by itself or the usage of cards cannot be blamed. What needs to be controlled is usage of the card. If you follow the ground rules for credit usage, they can be a shopaholics best friend. Here’s how:

Get rewards and cashbacks

There are cards that come loaded with lots of benefits and rewards and most importantly cashbacks that can seem extremely rewarding to avid shoppers. For instance, with Standard Chartered Manhattan Platinum Credit Card, you get a cashback of 5% for every Rs 150 you spend at retail outlets and supermarkets. Further, you can save on your travel expenses with this card as well. For instance, you can avail of a 20% cashback on the amount you spend on your Uber rides.

Save big while shopping online

Hooked to online shopping? Look no further beyond SBI Simply Click Visa and Master. With this card you can get up to 10x reward points when you spend online in partner stores and 5x reward points on all other online spends. Upon taking this card you also get Rs 500 as an Amazon gift voucher.

Save on your monthly expenses

Wish you had a credit card that allowed you to save on your monthly expenses? The Standard Chartered Super Value is just that. With this card you can earn cashbacks of up to 5% on fuel, payment of telephone and other utility bills and also earn 1 reward point for every Rs 150 on other expenses. Besides, all your big spends on Rs 5000 and above can be converted into easy EMIs.

These are a few examples of credit cards that reward you while spending. This just goes to prove that credit cards are not all evil and if you are judicious with your credit card spend and make smart choices, you can save money on every transaction you make. If you play by these rules and make it a point to make regular repayments within each billing cycle as well as keep your credit utilisation (the total amount of credit you use as against the total amount made available to you) under 30%, you are well on the way of building a high credit score.

Make a habit of it, and you have yourself a good credit track record. This will put you in good stead with prospective lenders when you are in need of credit. With a good credit score (750 and above out of 900) and a blemish free credit report, your credit application is likely to go through smoothly and you can get access to cheap and timely credit. But what if your credit score is not up to the mark and things have gone awry with card spend already, as you are reading this?

How to salvage your credit score

First things first, don’t hit the panic button. Take a look at your credit card outstanding bills and get a sense of what has gone wrong. Needless to say, you need to make arrangements to repay the outstanding amount. With a high outstanding amount, not only are you availing of the most expensive form of credit, it is bringing down your CIBIL score as well. If you cannot liquidate other sources of funds to make a repayment on this outstanding amount, you are better off availing of a personal loan with a low CIBIL score.

This loan can be beneficial in more ways than one. This kind of loan is called a debt consolidation loan. You use the proceeds to repay the outstanding amount on your card and pay a lower rate of interest (14-18% on personal loans as compared to 36 to 40% on cards annually). Further, once you start making regular repayments on this loan, you get a chance to rebuild your CIBIL score, brick by brick.

Thus, in conclusion, it is fair to state that if you are judicious with card spending from the very beginning you can continue to build your credit score, save on your spending and get rewarded too! In short, it is like having your cake and eating it too!

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