Well Well Well. Time has come to start writing about one of my favourite topic: Credit Cards. 

What are they:

The Concept is very old. Its just like you go to a general store and buy somethings and you tell shopkeeper to write it down on a notebook. I'll pay you later. Now those General store people don't put any interest on that and with mutual agreement you pay them back within some specified time. And this is the same thing, bank and financial institutions are doing. They are giving you money to buy something for which you might not be able to pay right now but you can pay it later. Credit card helps you to buy it and so you have to return them that amount aftter some time.

Who should not read this:

The one who loves to spend, one who is shopoholic and no control over his expenses and cannot stop himself when see new stuff or attractive discounts.

You got a call from a bank lets name it: ABC and they are offering you a credit card. And they are giving it to you without any joining fees and also life time free.

Rules to Remember:

If they say, that there is one time joining fees, but life time free, just reject it right away. Say: "i don't want it" That's it. no further discussions. They will give you more points on that like if you spend 5K with in two months then the joining fees will be given back, but in that case you might have to spend 5K for nothing just to get joining fees back, unless you were really plan to buy something. My suggestion is just say NO.

You got your Card:

So you have got your card and you are waiting for the day to make your first expenditure. Don't worry even if you don't buy anything because bank will not generate a statement until you buy something. So if its in your pocket, it won't charge you anything. So you went to a store and make a purchase of say around 2K on 1st-January and pay it through the card. On the basis of your purchase bank will decide a day when your statment will be generated. Let's say they generate it around 15th-January and they mention it to pay the required amount by 5th or 6th of Feburary. 

Remember:

  • If its not a big store, they might ask you to pay 2.5% service charge extra for using the card. Don't use the card then. Ask them for clarity if not written somewhere in their shop. Mostl these days they accept without service charge but still better to ask.

  • Read your statement carefully. First of all there should not be any service charge extra written in the statement. Every extra charge will be told to you at the time of buying only. No statement can be with charges which were not told. As i said, better ask at the time of buying if not mentioned.

Time to pay back:

Usually we have max: 50-52 days to pay them back. Let's have a small maths calculation here:

Your Statement date:      15th of Feb (lets say with 0 dues, you don't have to pay anything).

You make a purchase on: 16th Feb ( say 1K) .

Now for statement on 15th you are suppose to pay them by 5th March but since there were no dues as you didn't purchase anything till 15th feb so you are note paying anything( Your purchase on 16th Feb will be in next cycle).

So now for purchase on 16th-Feb, new statement will generate on 15th March( with amoount 1K) as per the cycle and you have to pay them till 5th April. So in total you have around 16th feb - 15th March (30 days ) + 15th March-6th April (20 days). Which means around 50 in total to pay them 1K. 

Similarly if you had made a purchase on say 1st March but not on 16th feb then your payback period will be: 1st March - 15th March (15 days ) + 15th March-6th April (20 days) which means total of 35 days.

So your time to paythem back will depend upon when you are making the purchase. Go through it again if it is not clear. It might sound difficult at first but its the simplest.

Now the Benefits:

There are many reasons for caryying the card:

  1. You don't need to carry the physical money, if you are travelling alone.

  2. Many discounts and offeres can be availed if properly utilized.

Benefits in Details:

There are many different credit cards offering different types of benefits. Some of which i am already availing.

  • Kotak Trump card: They give you 10% cash back on movies and dinning if your total amount in a billing cycle is 5K. Now if you purchase required things or pay you different bills, you might get to total of 5K in a month and in the statement you will see the 10% credited back to your account. From last 6 months , kotak is giving 1 buy - 1 ticket free in Cinemax. Also 2.5% surcharge waiver for tickets bought on IRCTC.

  • Remember: The point is to keep looking for offers. Every card will have new offer every month so use them accordingly. Read the details before the payment. It won't take much time but will benefit a lot.

  • Manhattan Card: 5% Cash back on Departmental store or shopping outlets like Big Bazaar or different Malls but on the minimum purchase of 1K. Earlier there was no criteria of minimum purchase but they have added it now. But don't worry, new cards are coming with similar offer without minimum Criteria. Keep Looking.

  • Citibank Indiran Oil Card: They started with the 5% cash back on petrol pumps but then they stopped, but they give you points for different purchases and with those points you can redeem petrol. This offer is only on Indian Oil Pumps with Citibank swipe machine where they will swipe card. So ask them for the citibank machine before using the card. Also there will be no fuel surcharge of 2.5% if you use your card at Indian Oild pumps with that machine. There is similar HP oil , ICICI card too. Try to search for that also.

  • HDFC Titanium Card: Although this card doesn't provide much benefits but they keep coming with new offers like you can divide your purchase in 3 or 6 equal EMI's and so if you have made a purchase of around 12K , they might have an offer where you can divide into 6 EMI and so then you have to pay 2K every month.

    Remember: Ask them first that is there any processing fees for converting it to EMI. Usually there is around Rs: 500 and if you feel its an ok amount to pay you can opt for it. Sometimes there is no processing fees also as due to competition many banks are waiving that amount. But make sure you ask for it. I have bought many things like that. It doesn't put much pressure.

So this was about some different cards. There are many other available. 

Some more Rules:

  • Don't have too much cards. And try to get those cards which suits your priority like EMI's , Movies , Dining, Travel and hotel Discounts. Keep looking for offers. Keep comparing them and then apply for the best which suits your needs.

  • Every card has a credit limit beyond which you should not use it. So take care of that too.

  • Don't opt for money transfer. it has high processing charges. There are some cards which provide free money transfer for some time, but see if you really need it.

  • Pay all the amount. Never pay only the minimum dues. You have to pay the interest on the rest of the amount. Just remember to pay what you have used with in time and you'll always enjoy benefits.

I hope the article will be of some benifit to you. I am saying this by my experiance as i am using it from long. I hope it will help you too. Do leave your feedback. And let me know in case you want more information.


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