Card Game

Used smartly, credit cards aren’t debt traps. You can save, and even earn, from them

Last year, Pranav Sakhadeo, a 39-year-old freelance writer, editor and translator, saved ₹55,000, on a total spend of ₹5L, by wisely deploying his 21 credit cards. That’s not a plug for credit cards, but a hat tip to Pranav’s financial discipline – reported by TOI – and his willingness to engage with each card’s fine print. Cards are notorious for high interest rates, and have sunk many careless users in debt. But Pranav, and others like him, have mastered the skill of using cards like tools. Last year, Economic Times wrote about Suraj Kumar Talreja, who had earned ₹2L worth of reward points in a year. The West has its ‘churners’, who regularly sign up for bonus points on new cards. Some make thousands of dollars a year this way. In 2023, a US Fed study estimated such sophisticated users earned $15bn yearly.

Still, they’re a rare tribe. If everyone optimised their card use, credit card issuers would go belly up. Fact is, for every prudent user, there are hundreds struggling with dues. In India, RBI data shows credit card delinquency growing rapidly. Total number of cards in use jumped from 6.3cr in July 2021 to 11.2cr last July. And card dues in the same period went from 1.3L cr to 2.9L cr. That suggests the number of ‘revolvers’ – customers who pay interest and roll over the principal, month after month – is growing. But Pranav, Suraj and others like them are ‘transactors’ – they pay off their dues in full, and earn rewards. Groceries, school fees or eating out, they know which card is best for each use, and pull it out every time, taking care not to run up charges. It takes laser focus, but the rewards make it worthwhile.