USE YOUR CREDIT CARDS WISELY
Credit Cards are either seen as angel or demon based on the experience people had with them or just reading either advertisements of credit card issuers or stories of people being harassed by their credit card recovery agents . Some people prefer to have as many as they possess , to show a status symbol. Some people abhor the very mention of the same as if they are going to be ruined by very touch of them . In fact credit cards are just instruments of financial transactions with few days of credit attached with them . They are just like any other instrument , say like knives . You can use them to your advantage in variety of ways or just kill yourself or the issuers of the cards . Some big card issuers have drowned themselves with mounting bad credits . Similarly many credit card holders have ruined themselves with huge credit s coupled with unbearable interest and charges . If issuing institutions show some diligence while selecting customers , they can run the business for long with profits . If card holders use them intelligently, they can make them as friend in need and friend in deed .
My first encounter with credit card in India was long back when few establishments were accepting the cards . I had gone to Calcutta and had transferred my bank accounts to that branch of the bank . While in bank , manager there offered me a credit card with out any charges . They mailed me the card in a week . I never thought that I would use it as no shop where I usually make purchases was accepting any card . Any how it was a free card and it went to my wallet .
But within few days of receipt , I had bad news on a Sunday morning and I had to rush to Bombay . I had few hundred rupees in my wallet and along with this credit card . Banks were closed . I was new there and hardly had acquainted my neighbors . I knew a flight would cost few thousand rupees . In that situation , card came to my rescue. The flight costed me around 15,000/- as there was no direct flight available and I had go via Delhi . It was my first emergency use of credit card .
I think that the emergency use of credit card is one single factor which tilts the argument in its favour . Whether you have cash in hand / bank or not , you can meet your emergency needs in nick of the time . Any how let us see the how we can make it as our angel friend .
SELECT YOUR CREDIT CARD
1. There are variety of credit cards available . Select a card which has no joining fee or annual fee attached to it , unless you have a compelling reason to go for a premium card which carry those charges . Many of the banks which issue credit cards have such vanilla cards . If you want to go in for a premium card , weigh benefits against the charges you have to pay . If you have to pay , say, Rs 5,000 / per anum for the card , you must be in a position to use such card to the extent your reward points / other benefits would save you at least that amount . Suppose you are a regular air traveler and premium card offers extra reward of air miles along with lounge access in the airports , it would be worthwhile to have such cards . There is no point in holding a premium travel card to a person who rarely makes air travel.
2. Have a credit card from your regular banker who has all your accounts with him . It is easier to get from such bank as they have full knowledge of your credit status . It will also make easier for you to make payments of your dues . If you are otherwise ineligible to take credit card from them due to reason known to them , you can take a against your own deposit . It has twin advantage . While you get interest free credit from the card , your deposit would be earning interest continuously .
3. Have at least two credit cards , one for your regular monthly expenses and the second one purely for your unscheduled expenses , emergency or otherwise . Be careful while using the second one .
4. Compare various credit cards through portals on the internet to find which one suits you best . You may apply on line also . Some of such portals for U.S citizens are https://www.creditkarma.com/creditcards/
In India we have http://insurance.policybazaar.com/creditcards.
You can go directly to the portals of bankers and find a suitable card for you
USE PRUDENTLY YOUR CREDIT CARD
1. Golden principal is " USE CREDIT CARDS TO BUY WHAT YOU NEED AND DO NOT BUY JUST BECAUSE YOU CAN USE CREDIT CARD "
While making a purchase , forget that you have card with you . Remember your card while making payment for the purchase . In nut shell , avoid purchase of items which are otherwise unaffordable for you , even if your card permits you .
2. Use cards only in those places , whose bonafides are known and who do not charge additionally for usage of card . Avoid shady shops , portals . Some of the other safety tips
1. Sign the signature panel on the back of your card as soon as you get
2 Never keep your PIN code in the same place as your card
3 Keep your account number private
4. Make sure your devices and networks are secure
5. Shop online only on trusted web sites
6. Keep your passwords secret
7. Have a tab on your account . Check often
Don't pay for usage of cards .Some shops/ portals charge up to 2 % transaction amount as fees . No point in shelling additional amount when you can pay in cash . If a shopper insists and you don't have ready cash , you draw from near by ATM using your debit card .
3. Try to avail maximum days of free credit . Normally credit cards have 20 days to 50 days free credit period . If you use the card at the beginning of billing cycle , you can avail maximum no of free credit days .
4. Never draw cash using your credit card . Charges and interest are heavy . Draw cash only using your debit card
5. CHECK OFTEN ON OFFERS AND ADDITIONAL REWARDS . You may be benefited .
PAY DUES OF CREDIT CARDS DILIGENTLY
1. PAY IN FULL BEFORE DUE DATE . Never fall in to trap of paying minimum due .
Interest Rates are high on credit cards . It varies between about 20 % to 40 % PA . Avoid at any cost . If you still don't have cash to pay , negotiate with the credit card company for a cheaper loan against some collateral or otherwise .
2. Diarise due date . Avoid Late payment charges . Avoid default .
3. Give standing instruction to your banker to make payment 100 % of dues on due date . If your bank account and credit card are with the same banks , it becomes much more simpler.
MAKE MOST USE OF CREDIT CARDS PROFITABLY
In nut shell , SELECT A CARD WITH NO CHARGES , USE THE CARD PAYING NO CHARGES AND PAY FULL ON DUE DATE WITHOUT ATTRACTING PENALTY . You will enjoy Free Credit and Reward points at NO COST . Maximize credit period by using at the beginning of the billing cycle . HAPPY CREDIT CARD USAGE
DGM ( Retired )
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