Dr. Snehal Mehta, consulting Psychiatrist at Holy Spirit Hospital, Mumbai, refutes the idea.

So what makes credit cards a good money tool?

Splurge More?

Think you will splurge more than you can afford? Your monthly budget will go haywire?

With credit cards, this need not be the case any longer. Your monthly card statements will keep you on track. From what you bought, to from where and for how much, every single transaction is highlighted in your billing statement.

Infact, you don't even have to wait till the month end to find that out. You can access your monthly statement online and through ATMs.

Are the Interests Killing You?

The interest levied by credit cards are steep. But they shouldn't be a cause for concern if you repay the amount within the time frame provided by the bank or the card companies.

"As per credit card industry regulations, if you happen to repay the entire bill amount within the time frame given by the company, then no interest will be charged," says Vidya Monde, Branch Manager, ICICI Bank.

However, if you happen to keep a balance on your card, the astronomical interest rate that card companies charge can burn a hole in your pocket.

"Say you have an emergency which costs a lakh or more. No one is going to loan you such a huge amount at a short notice. That's where a credit card comes in handy. You can meet the expenses without delay," says Financial Advisor Sanjay Matai.

His advice is that you repay the credit amount immediately even if you need to get a personal loan. This is because interest rates are lower and more feasible than the ones charged by the credit cards.

"The advantage of having a credit card is fully availed only if you can pay the entire amount and not keep any balance on your card," seconds Financial Advisor Sandeep Shanbag.

However, if you can't pay the full amount in one shot, there are Equated Monthly Installment (EMI) specific cards available too. Such as the ICICI EMI card. The only advantage being that you can fix your EMI amount.

Any increase in the purchase won't increase your EMI. Instead the tenure will increase proportionately.

How Can I Save?

Co-branded cards such as ICICI Big Bazaar Gold or the ICICI Airtel silver credit card gives you discounts on specific products.

"The discounts on products may be very low when looked at individually, like a 2% discount on a product. But at the end, when you tally the entire list of items bought, you realise that these two percents have added to quite a bit of saving in your monthly shopping budget," says Saraswathi Nair, a housewife and an ICICI Big Bazaar Shakti Credit card holder.

Look out for Co-branded cards if:

• You are a frequent traveller. Co-branded travel cards can offer you discounts on airline and train tickets. This feature is available in other premium cards as well.
• You need to make heavy purchases such as when you are setting up a home. Some cards also have cash back offers on purchases of electronic items up to a certain amount.
• Go for co-branded cards if you frequent any fuelling stations regularly. Co-branded cards usually work with specific fuel outlets like and Indian Oil or HPCL. Using these cards you can get discounts and cash back offers on vehicle accessories such as tyres, batteries etc.
• You frequent certain diners and restaurants that also tie up with credit cards and give you discounts on the total bill.

Cards also offer reward points for any transactions made. For example, 1 reward point for every purchase made for Rs.100 and above.

Accumulate those reward points and you can redeem them for free gifts such as passes for events, movies, pubs and discotheques, vacation packages, gift vouchers etc.