Stay debt-free: Top 5 ways to control credit card expenses

Credit card distribution growth and spending in India continues to rise, reaching ₹1.84 lakh crore in January 2025, according to data provided by Asit C. Mehta Investment Intermediates.

Hence, in this kind of an environment managing credit card expenses effectively is crucial to avoid financial strain later on. For the same proper education, knowledge sharing on credit management needs to be imparted to credit card holders so as to make them aware of the dangers of having credit card debt and how interest over this debt makes things even more challenging during repayment. 

Here are five key ways to help Indian users control their credit card spending:

Properly understand and manage credit utilisation

One of the most critical aspects of managing credit card spending is maintaining a healthy credit utilisation ratio. Experts recommend keeping this ratio below 30% to avoid high-interest charges and protect your credit score. This is something that needs to be followed strictly to ensure that your credit profile and your credit score remains spotless.

For example: If your credit limit is ₹1 lakh, try to restrict your outstanding balance to ₹30,000 or less.

Generally experts suggest using only 10-15% of your credit limit for optimal financial health. This is extremely important because, when your credit utilisation ratio is in check it reflects that you are someone who is reliable and not entirely dependent on credit and debt to fuel your life expenses. It also shows that you are a trustworthy person who knows how to manage your finances properly.

Therefore, it is simple, say for example: If your credit limit is ₹1 lakh then you should try to restrict usage up till ₹10,000 only. The idea should be to keep your credit limit below 30% at any cost i.e., below ₹30,000 in this case for all times. This if practiced consistently will go a long way in giving you a healthy credit profile and a strong credit score.

Setting up a budget and tracking expenses

Creating a budget and tracking your expenses are fundamental steps in controlling credit card spending. Properly check your monthly statements, take down notes, think and try to identify areas where you can cut back spending.

You can also use SMS alerts or phone alarms to monitor your transactions and ensure you stay within your budget. Never spend on things you don’t need, always look at the long-term picture. Decide a specific budget for making purchases and stick to it, avoiding the temptation to overspend simply because your credit limit allows it.

Automating payments and avoiding late payment fees

To avoid late fees and interest charges, opt for the autopay facility on your credit card. This allows you to make repayments automatic and hassle-free, ensuring timely settlements. Further, opt for credit cards with no annual or monthly fees to reduce your overall expenses. Be cautious of unnecessary add-on features that inflate your monthly charges. The focus here should be on surviving within the means you have instead of using your credit card irresponsibly.

Converting big purchases to EMIs and monitoring credit reports

Now do remember, for all big-ticket purchases, consider converting them into no-cost EMIs if possible to spread the cost over several months. Do ensure that this is done without additional interest. The focus here should be to buy some time and also ensure that you are not paying additional taxes and interest for the same.

Now after following these steps, regularly monitor your credit report to ensure it reflects your financial health accurately. This helps in maintaining a good credit score, which is essential for future financial transactions and for obtaining any more loans.

Implementing spending discipline

Finally, discipline and proper debt vigilance is key when using credit cards. Avoid emotional spending and use your card only for necessary expenses. Activate old credit cards to maintain a long credit history, which positively impacts your credit score.

Therefore by following these simple strategies, you can effectively manage your credit card spending and maintain financial stability without building on more debt.

Disclaimer: Credit card usage involves financial risks; consult your financial adviser for guidance on managing spending and avoiding debt complications.