If you buy with a credit card, you have till the due date to pay off the money without attracting interest charges. If you withdraw cash from an ATM using your credit card, your interest metre starts right there. 

What's more, you are also charged a fat fixed cash withdrawal fee (about Rs 200 to Rs 500, depending on the bank).

Use debit cards for ATM withdrawals; use your credit card only for emergencies.

Also Read: How Your Credit Card Works

5. I don't have to read all that fine print.

On the contrary. That's where all the kickers are tucked away. If you come across any asterisk marks or Conditions apply signs, make sure you read the fine print.

Credit card companies are not charities. They are not about to give away anything free or cheap. Check if the offer really benefits you, really offers what it says, and does not have any hidden extra costs/ penalties.

6. I can go over the set limit.

Each credit card specifies a certain limit up to which you can spend. Any more, and you will have to pay over-limit charges, even if your bank lets you exceed the limit.

Not many are aware of this. Don’t assume you are allowed to exceed your credit card limit. There will be additional charges. Double check this point for your card.

7. Credit cards are safe, so I can use mine overseas too.

Convenient, yes. Economical, no! There is a hidden cost here: exchange rates. Stick to travellers' cheques or prepaid forex cards -- they are cheaper.

What if there is a theft? Travellers' cheques/ prepaid cards are for a fixed amount, but your card can be used up to its maximum credit limit. Choose your option now!

Also Read: Protect Yourself from Credit Card Fraud

The author, Sanjay Mathai, is an investment advisor and promoter of wealtharchitects.in. He can be reached at sanjay.matai@moneycontrol.com.