Credit cards, widely used for transactions, aid financial management and credit building. Yet, they pose risks and responsibilities that demand awareness.

To avoid any risk, knowing the advantages and disadvantages of credit cards and the different ways to use them wisely is important.

Credit cards have some benefits that can make your life easier and save you money if used wisely, such as:

• Flexibility: Credit cards give you the flexibility to pay for your purchases over time instead of paying the full amount upfront. They're handy for unexpected expenses or during emergency when you're short on cash.
• Accessibility: Credit cards are widely accepted, both online and offline, across the world. You can use your credit card to shop from anywhere, anytime, without worrying about currency exchange or carrying cash.
• Affordability: Some credit cards offer low or zero interest rates for a certain time, which can help you pay off your debt faster and cheaper. Some credit cards also offer balance transfer options with a lower or a zero-interest period.
• Incentives: Credit cards can reward you for using them in various ways, such as cashback, points, discounts, vouchers, coupons, etc., that will help you save money on your future credit card purchases.
• Protection: Credit cards protect you from fraud and theft, as they have features such as chip, PIN, etc., that prevent unauthorised use of your card. Moreover, they offer insurance against the non-delivery of goods purchased with your credit card.

Credit cards are useful and easy to use, but they also have some risks and responsibilities. Some of the disadvantages of credit cards are:

• Interest: If you do not pay back the full amount by the due date, then you have to pay interest on the borrowed money. The interest rate can be high and change over time.
• Fees: Fees for different services or transactions, like yearly, delayed, or exceeding limits, contribute to your total bill and may impact your credit score if not settled promptly.
• Debt: Misusing credit cards can cause debt accumulation, while late payments add to financial strain. The convenience of credit cards might encourage impulsive spending, fueling a cycle of debt.

Below are seven tips on how to use credit cards wisely:

• Know Your Credit Card Terms: You should know your credit card terms, such as the interest rate, credit limit, the grace period, the fees, etc. You should read the terms and conditions carefully before applying and review them regularly.
• Spend Within Your Means: You should spend within your means and only use your credit card for things that you can afford to pay back. You should not use your credit card to live beyond your income, or to buy things that you do not need.
• Pay On Time And More Than The Minimum: Always pay your bill on time and more than the minimum amount due every month. This will help you avoid interest charges, late fees, penalty fees, etc., and also improve your credit score.
• Keep Your Balance Low: You should keep your balance low and not use up your entire credit limit. This will help you avoid over-limit fees. You can check your balance and available credit through credit card statements, online banking, etc.
• Use Your Rewards Wisely: You should use your rewards wisely and not let them go to waste. Redeem your rewards for things that you need or use them to save money, such as by paying your bill, reducing your balance, or getting discounts.
• Protect Your Credit Card: You should protect your credit card from fraud and theft by keeping it safe and secure. Do not share your credit card details with anyone or use your credit card on unsecured websites or devices.
• Review Your Credit Card Statement: You should review your credit card statement regularly and look for any errors, fraud, or unauthorised charges. If you find any, you should report them to your issuer as soon as possible and get them resolved.

Before applying for a credit card, you should consider the following questions:

• Do you need a credit card and have a clear goal for using it?
• Do you meet the eligibility criteria and have a good credit score?
• Have you compared different credit cards and offers to find the best one for you?
• Have you read the terms and conditions carefully and understood the interest rate, fees, grace period, minimum payment, etc.?

Credit cards offer advantages like flexibility, affordability, incentives, and protection. Yet, they come with downsides such as interest, fees, and debt.

It's crucial to use credit cards judiciously, considering your personal and financial situation and preferences. Before applying, compare cards and carefully review terms and conditions.