Purpose I tried to put my point for those persons who don’t want to use credit card becoz somebody told, it is bad habit. Hi pal! now-a-days we are using nmany things which condidered costly/harmful earlier. so try it also and utilise its advantages for your monetory gains.
Credit cards are available for free and many customers are opting for it because of its convenience. Some people are still skeptical about a credit card’s usefulness. They are correct! Credit Card is not for those people who indulge for shopping spree, not for those who spend blindly without thinking of their purchase capacity but it is for those who make payments like the best way to make payment, negotiation, record keeping, control regular budgets; provided you must be VERY careful to not expose to credit revolving.
The first question one can ask, ‘Why do the banks give 55 days interest-free credit?’ it is hidden in the working process of Service provider. Suppose You hold A credit card and wishes to purchase electronics item costing Rs 50, 000. He has three options.
*Purchase by cash
Purchase by taking a loan
Purchase by credit card*
First option, there is nothing to worry about. It is a straight transaction. Your pocket got sucked right now, handle 50, 000/-, bear worries involves in high cash transaction, or wait for cheque clearance to get your desired item.
Second option, You will end up paying Rs. 750 interest @ 1.5% per month.(Generally it is not advisable, personal or consumer loans are most costly affair)
Third option, You will enjoy a credit of more than 55 days, which is without interest.
Again, the question remains the same, how card would give an interest free credit Rs 50, 000/-, when they can earn 750/-, it is transaction based process and in banking system transaction points are important steps to earn(You know that banking system become wealthier if money transected many times) Cost is borne by the system in this case for interest free credit to you.(Article connected understand this process
To promote the usage of their bank’s card, all banks offers certain reward points and cash-back schemes. This is an additional benefit to all customers for using a credit card. These reward programmes are more popular among the co-branded cards since it is adding relevance to the expenditure they make.
Here after getting informed for one side one needs to know the other side of the coin also.
If item is not sold on MRP(bargain/Best Price) then Use credit card to further negotiate and get more cash discount of 2-3% rather than making payments by credit cards.
If item(like grocery, clothes, shoes, hotel bills) are fully discounted, On MRP, not appropriate or worthy to bargain; then become a prince and proudly flash your card(becoz you know that you will get your profit in terms of reward points, promotional schemes)
The reward points are always not equal to the value of 1/- as we are made to believe, most of the times we get Rs 500 gift voucher for 1000 points. so all this should be better known. If you are getting free gifts or vouchers without spending extra money, it is definitely a good deal. But you need to be careful when asked to put in extra cash to redeem a gift along with your points. example, you may want to order a vacuum cleaner from a reward catalogue, you may have to pay Rs 975 extra apart from contributing 2100 points. In such cases, it would be wise to find out the actual price of the product and then compare it with the monetary value of the points plus the extra cash that you have to shell out. You may discover that it is cheaper to buy a vacuum cleaner rather than wasting your points.
We all love free gifts/Discounted product/best deal/bargain and they are always welcomed. But be careful, calculate them for your favor and make the most of it!
Now May I share some "laxman Rekha" which I learned/following for last 9 years credit card usage, Please share your thumb rules also to make it more useful.
*Get only one card at a time, better if it is co-branded card with the retails you uses most(Like ICICI-Big bazaar, SBI-Vishal Mega mart, ICICI-central).
Do not revolve credit at any cost.
Use the card as it is cash in your hand(Difficult to assume initially but once practiced it is the most convenient way)
Pay attention on each of transaction(After all you are free from carrying cash).
Read the statement carefully as it arrives(you will be tension free for next 30 days spending)
Do not hesitant to ask clarification for anything extra charged? It is your right-to-know.
While dealing with cash, use this card to bargain also; you may get arround 5% extra discount, (There is no best bargainer than’gandhi chaap’, once Shopkeeper holds a note; it is very difficult to give it back. try it once ask your money back & you will feel the impact)
Just be careful while flashing the card, pay attention while statement reading, regular on you monthly payments and you will find that this monster became your genie.